Metro Annual Report 2019–20 680 George Street Sydney NSW 2000

Executive Reception Monday to Friday 7.30am to 6.00pm Ph: (02) 8265 9400

Postal address PO Box K659 Haymarket NSW 1240

© 2020 Sydney Metro. This report was first published in October 2020. View or download this report from the Sydney Metro website: sydneymetro.info Letter of submission

24 September 2020

The Hon. Andrew Constance MP Minister for Transport and Roads

Parliament House Macquarie Street, Sydney NSW 2000

Dear Minister,

I am pleased to submit for presentation to Parliament the Annual Report for Sydney Metro for the financial year ended 30 June 2020.

The Annual Report has been prepared in accordance with the Annual Reports (Statutory Bodies) Act 1984 and the regulations under that Act.

The Financial Statements for 2019-20, which form part of the report, have been submitted to and certified by the Auditor-General of NSW.

Yours sincerely,

John Arthur Gail Pemberton Chairman, Director, Sydney Metro Board Sydney Metro Board

Cover: Bella Vista Station. Left: Cherrybrook Station. 1 Sydney Metro Annual Report 19–20

Contents 1.2 1. Foreword 5. 4.3 4.2 4.1 4. 3.5 3.4 3.3 3.2 3.1 3. Achievements 2.2 Charter 2.1 2. 5.6 5.5 5.4 5.3 5.2 5.1 From theChairmanandChiefExecutive Corporate governance Requirements arisingfrom employment arrangements Numbers andremuneration ofseniorexecutives Human resources impactsoftheCOVID-19 pandemic Industrial relations policiesandpractices Personnel policiesandpractices Exceptional movements inwages, salariesorallowances Our employees Our executives Our organisation structure Our organisation and people Workforce diversity Workforce development Workforce capability Financial responsibility Government andindustry engagement Customer andcommunity engagement Successful engagement Precincts andplaces Metro NorthWest Line Operational excellence Sustainability andenvironment Independent project reviews Sydney Metro –Western Sydney Airportproject project Sydney Metro City&Southwest project Meeting delivery commitments Operational performance Key facts andachievements Our strategic priorities Who we are About Sydney Metro About us Insurance Cyber SecurityPolicy attestation Internal auditandriskmanagementattestation statement Audit andriskmanagement Governance framework Sydney Metro Board 39 33 44 44 46 46 13 45 36 29 38 38 35 32 23 23 25 37 37 37 37 37 27 27 10 41 19 16 31 31 31 15 15 17 17 3 7 11 11 6 9 9 9 6. Reporting and disclosure 47 6.1 Community satisfaction 49 6.2 Work Health and Safety 49 Initiatives 50 Further improvements to health and safety performance 50 6.3 Research and development 50 6.4 Access to Government information 50 Government Information (Public Access) Act 2009 50 6.5 Overseas travel 54 Promotion (overseas visits by employees and officers) 54 6.6 Legal change 55 Significant judicial decisions affecting Sydney Metro, 2019-20 55 Acts and subordinate legislation affecting Sydney Metro 56 New Acts and amendments to Acts assented to or commenced during 2019-20 57 New subordinate legislation and amendments to subordinate legislation made or commenced during 2019-20 58 Disclosure of subsidiaries 58 6.7 Payment to consultants 59 6.8 Public interest disclosures 60 6.9 Privacy Management Plan 60 Privacy and Personal Information Protection Act 1998 60 6.10 Multicultural policies and services 61 Multicultural policies and services program 61 Agreements with Multicultural NSW 61 6.11 Disability Inclusion Action Plan 61 6.12 Land disposal 62 6.13 Accounts payments and grants 63 Outstanding invoices by age at the end of each quarter, 2019-20 63 Accounts paid on time within each quarter, 2019-20 64 Funds granted to non-government community organisations 65 Economic or other factors 65 Implementation of price determination 65 Investment performance 65 Liability management performance 65 Appendix A – Financial Statements 67 3 Sydney Metro Annual Report 19–20

Foreword Foreword • 4 5 Sydney Metro Annual Report 19–20 1.2 From the Chairman and Chief Executive

On behalf of Sydney Metro, we are pleased to present the 2019-20 Annual Report. It conveys Sydney Metro’s key activities and achievements for the year and the benefits for our customers, communities and the State.

During 2019-20 Sydney Metro has:

• completed the first year of operations on Sydney’s first metro, the

• advanced construction activities on Sydney Metro City & Southwest

• completed the Final Business Case and commenced procurement activities on Sydney Metro West

• developed the Sydney Metro – scope and project definition, and completed the Final Business Case

• responded to the changing environment of the COVID-19 pandemic.

As Sydney Metro plays its critical role in supporting the NSW Government’s State Infrastructure Strategy, Future Transport 2056, and A Metropolis of Three Cities, we will meet opportunities before us. These include:

• delivering customer-centric services for the people of NSW, helping relieve congestion and improving journey times and experiences for our customers

• delivering a technology-led improvement in customer experience

• being a commercially astute partner to industry during a record infrastructure boom

• being effective and successful place makers, reflecting the character and needs of dozens of individual communities along the alignments in our precincts and places

• growing a public sector workforce with experienced, inclusive leaders

• collaborating across government to deliver sustainable city-shaping outcomes.

We look forward to continuing to transform our city with a world-class metro, and shape our communities and the way we move in the future.

John Arthur Dr Jon Lamonte Chairman, Chief Executive, Sydney Metro Board Sydney Metro

Previous page: Bella Vista Station. Foreword • 6 Left: Bella Vista Station. 7 Sydney Metro Annual Report 19–20

About us About us • 8 2.1 About 2.2 Who we are Sydney Metro Sydney Metro is the NSW Government agency tasked with delivering the high-capacity, Charter high frequency metro network across the Sydney Metro is a NSW Government agency Greater Sydney region, Australia’s biggest

Annual Report 19–20 Annual Report constituted by the Transport Administration public transport program and the largest Act 1988. Sydney Metro has functioned under urban railway infrastructure investment that Act since 1 July 2018. Prior to this date in the nation’s history. It is Australia’s first Sydney Metro was a delivery office within fully-automated, fully accessible railway. Transport for NSW. In that respect our aim is to plan, build, The principal objectives of Sydney Metro operate and optimise the Sydney Metro under this Act are to deliver safe and reliable customer journey. We are an operating metro passenger services in an efficient, agency within the Greater Sydney Division effective and financially responsible manner, of the Transport cluster, contributing to an and to facilitate and carry out the orderly and integrated public transport network serving efficient development of land in the locality a range of customers and communities. of metro infrastructure. The other objectives We are here to deliver for our State – of Sydney Metro are: maximising the social, economic and (a) to be a successful business and, to that end: environmental opportunities and benefits catalysed by safe, reliable, turn-up-and- (i) to operate at least as efficiently as go services, and the delivery of vibrant, any comparable business; and attractive precincts around our stations.

(ii) to maximise the net worth of the We recognise that we need to be responsive State’s investment in the metro; to the needs of diverse communities along 9 (b) to exhibit a sense of social responsibility our alignments, and to be successful by having regard to the interests of the we must continue to refine our delivery community in which it operates; methods, optimise our service offering, and share our insights and experience. (c) where its activities affect the environment, to conduct its operations in compliance Our turn-up-and-go customer offering is at the with the principles of ecologically heart of the Future Transport 2056 strategic sustainable development contained in vision for growing our public transport network, section 6(2) of the Protection of the and creating vibrant, integrated and sustainable Environment Administration Act 1991. places for our customers and communities. We have end-to-end accountability for delivering the metro service – from planning and construction, to operations, and integrating metro rail into the public transport network. Sydney Metro Sydney keep people safe and allow trains to get in and out of stations faster.

Previous page: Sydney Metro. Our strategic priorities Our place in the Transport cluster

Our mandate is to support the economic Sydney Metro operates within the development of the State, working to general government sector, and is deliver the NSW Government’s vision of administratively arranged within the integrated, connected and liveable cities. Transport cluster. The Transport cluster’s principal agency is Transport for NSW. We commit to easy, safe and reliable turn-up- and-go services, active and attractive precincts We act in close partnership with our cluster and places, and delivering these customer- colleagues, especially those within the centric outcomes in a socially, financially and Greater Sydney Division – we work with environmentally responsible way. We want Transport for NSW and the other operating to work together to grow the public value of agencies to collectively deliver an easy-to- the State’s investment, for the benefit of all. use, integrated public transport service for NSW. Transport for NSW has accountability Our vision is to transform Sydney for cluster strategic planning, cluster policy with a world-class metro. development, overall transport service Our mission is to deliver Sydney a connected integration, and multi-modal coordination of metro service, providing more choice network disruptions. Work is underway on to customers, and opportunities for our some significant changes to Transport for communities – now, and in the future. NSW and the operating agencies as part of ‘Evolving Transport’. Figure 1 gives details of Our strategic objectives sharpen our focus the operating model implemented as part of as a successful and outcomes-oriented ‘Evolving Transport’ for the Transport cluster. business. Our strategic objectives are:

• successful engagement

• meeting delivery commitments

• operational excellence

• financial responsibility

• workforce capability.

Sydney Metro’s strategic direction is guided by external and internal strategies and plans, including the Premier’s Priorities, Future Transport 2056, and Transport’s 10 Year Blueprint, which sets a medium-term course to deliver upon the Future Transport 2056 Strategy.

Oce of the Secretary of Transport Secretary

Customer Strategy Greater Sydney Regional and Point to Point Commission and Technology Outer Metropolitan

Sydney Trains Port Authority of NSW NSW TrainLink Sydney Metro NSW Oce of Transport Safety Investigations RailCorp

Infrastructure and Place

Safety, Environment and Regulation An integrated model focused on urban and regional customers, Corporate Services and the communities where people live and work.

People and Culture

Figure 1: The operating model of the Transport cluster (as at 30 June 2020).

About us • 10 Key facts and achievements

19.1 million trips and over 3.9 million kilometres travelled on the Metro North Annual Report 19–20 Annual Report West Line.

Completed tunnelling on the Sydney Metro City & Southwest Project.

Public exhibition of the first Environmental Impact Statement for the Sydney Metro West Project. 11

Sydney Metro – Western Sydney Airport announced by the NSW Government.

Operational performance trips for the financial year. This decline in patronage was due The Metro North West Line is the to the COVID-19 pandemic. first stage of Sydney Metro. It completed its first year of operations Overall service performance for in May 2020. In 2019-20, Sydney 2019-20 has seen significant Metro provided 110,895 services, improvement since operations over a total of 3.903,504 kilometres. commenced in 2018-19. Just over 99 per cent of services were Metro North West Line patronage delivered; service frequency within in the 2019-20 financial year one minute was approximately reached 19.1 million*, which was 98.5 per cent; and around around 27 per cent lower than 94 per cent of Journey Time the initial forecast of 26.1 million was below 37 minutes.

*Note: The annual patronage figure has been adjusted for un-ticketed travel (fare evasion) as per Transport for NSW guidelines and official figures. Sydney Metro Sydney

Right: Sydney Metro projects. Tallawong Rouse Hill

Schofields Kellyville Hills Showground Cherrybrook M7 Bella Vista Castle Hill Norwest

Opened 2019 St Marys M2 Macquarie Epping University

Orchard Hills Macquarie Park Chatswood North Ryde M4 Westmead Construction starts 2020 Parramatta Crows Nest

Victoria Cross Luddenham Sydney Olympic Park Construction starts 2020 North Strathfield Barangaroo Five Dock Pyrmont Sydney CBD Martin Place The Bays Burwood Pitt Street Airport North Business Park Central

Waterloo Airport Opening Hurlstone Dulwich Terminal 2024 Campsie Park Hill Bankstown Lakemba Canterbury Sydenham Marrickville Western Sydney Belmore Aerotropolis Punchbowl Wiley Park Liverpool M5

Kogarah

La Perouse

Key Metro North West Line Sydney Metro City & Southwest Sydney Metro West (final alignment to be confirmed) Sydney Metro West optional station Sydney Metro – Western Sydney Airport Servicing and Western Sydney International Airport (final alignment to be confirmed) suburban network Future Metro Macarthur

About us • 12 13 Sydney Metro Annual Report 19–20

Achievements Achievements • 14 Sydney Metro City & Southwest will 3.1 Meeting delivery deliver new metro stations at Crows Nest, commitments Victoria Cross, Barangaroo, Martin Place, Pitt Street and Waterloo and new underground metro platforms at We will deliver high quality Central Station. In addition, it will upgrade and convert all 11 existing stations between metro infrastructure and Annual Report 19–20 Annual Report Sydenham and Bankstown to metro standards.

places – safely, on time, The City & Southwest delivery strategy and on budget. involves a range of contracts across the project alignment. Most contracts have been awarded, with the remaining contracts We have been commissioned by the NSW expected to be let by mid-2021. Government to deliver an unprecedented infrastructure program with a long-term Key project progress was made during investment pipeline. Safely achieving these 2019-20. As of 30 June 2020: commitments, on time and on budget, is critical • 13 out of 17 major contract packages have to demonstrating to the NSW Government and been awarded to the people of Sydney that we are a capable and efficient steward of this opportunity. • tunnelling the 15.5-kilometre twin railway tunnels is complete Sydney Metro City & Southwest • 73 per cent of cross passages and almost project 94 per cent of invert slabs in all tunnels are complete The Sydney Metro City & Southwest project includes a new 30-kilometre metro line • works are underway at new stations, and extending metro rail from the end of the Metro construction is underway at Central Station and at Sydenham Station and Junction. 15 North West Line at Chatswood, under Sydney Harbour, through new central business district (CBD) stations and south west to Bankstown. It is due to open in 2024 with the ultimate capacity to run a metro train every two minutes each way through the centre of Sydney. Sydney Metro Sydney Tunnel boring machine Mum Shirl (right) breaks through at the Sydney Metro Barangaroo station site joining tunnel boring machine Nancy inside the station box, January 16, 2020.

Previous page: Travelling on Sydney Metro. Sydney Metro West project The environmental assessment process for Sydney Metro West is being staged Sydney Metro West is the metro railway line that in recognition of the size of the project. will deliver about 24 kilometres of underground Public exhibition of the Environmental Impact rail between Westmead and the Sydney CBD Statement (EIS) for the project Concept and through Olympic Park and The Bays Precinct. Stage 1 was undertaken from 30 April to In October 2019, the NSW Government 26 June 2020. The Concept application seeks announced the locations of seven proposed approval for construction and operation of metro stations at Westmead, Parramatta, a Sydney Metro line from Westmead to the Sydney Olympic Park, North Strathfield, Sydney CBD, with specific construction works Burwood North, Five Dock and The Bays. being assessed in subsequent applications. Further planning and design work is The Stage 1 application seeks approval for underway to determine the location of all major civil construction works between a new metro station in the Sydney CBD. Westmead and The Bays, including station At the same time, Rydalmere and Pyrmont excavation and tunnelling. Future project were identified as strategic station approvals will consider all stations, depots options also for further investigation. and rail systems between Westmead and The Bays and all major civil construction An assessment of the feasibility of a Sydney works including station excavation, Metro West station at Rydalmere concluded tunnels, stations, depots and rail systems in April 2020. Following this comprehensive between The Bays and the Sydney CBD. review, the NSW Government announced that a potential station at Rydalmere will not In April 2020, Expressions of Interest were proceed, given its distance from the proposed called for the first two tunnelling contracts railway alignment and the additional time it from Westmead to Sydney Olympic Park and would add to the journey between Parramatta from Sydney Olympic Park to The Bays. The and the Sydney CBD. Evaluation of the merits Expressions of Interest closed in June 2020 of a station at Pyrmont is still ongoing. with the tender process to continue into 2021. The first tunnel boring machine is expected Sydney Metro West will support a growing to be in the ground before the end of 2022. city and deliver world-class metro services to more communities. The project will create A stabling and maintenance facility for the approximately 10,000 direct and 70,000 new fleet of driverless metro trains will be indirect jobs. The new rail line is fundamental located on government owned land at Clyde to the realisation of the Greater Sydney Region that is currently used for speedway racing. Plan and Future Transport 2056, which supports The NSW Government will relocate the a vision for a Metropolis of Three Cities– where speedway to the existing motorsport precinct people can conveniently access jobs and at Eastern Creek. The formal planning and services within 30 minutes by public or procurement process for the new speedway active transport. is underway and construction is expected to start in the second half of 2020. Sydney Metro West will have a travel-time target of around 20 minutes between Parramatta and the city. This new stand-alone metro will become the easiest and fastest journey within the growing corridor and between the Parramatta and Sydney CBDs, moving more than 40,000 people an hour in each direction and doubling the current rail capacity. This frees up capacity on existing suburban rail to the west, increasing reliability of services to and from areas like Blacktown, Penrith and the Blue Mountains.

Achievements • 16 Sydney Metro – Western Sydney The project includes six new metro stations: Airport project • St Marys will interchange with the existing Sydney Metro – Western Sydney Airport is suburban railway station and connect Sydney Metro’s newest project with a new customers with the rest of Sydney’s metro line to service Greater Western Sydney, rail system connecting St Marys, the new Western • Orchard Hills will service a future commercial Sydney International (Nancy-Bird Walton) Annual Report 19–20 Annual Report and mixed-use precinct Airport and Western Sydney Aerotropolis. • Luddenham will service a future education, Following the completion of a business case, innovation and commercial precinct the Sydney Metro – Western Sydney Airport railway line was announced on 1 June 2020. • Two stations will be located within the airport site – one at the airport terminal and The project is a key commitment of the one at the airport business park Western Sydney City Deal, a 20-year agreement signed in March 2018 by the • One station will be located at the commercial Australian and NSW Governments, and heart of Western Sydney Aerotropolis. eight Western Sydney local councils. With the project transitioning from the It will become the transport spine for the development phase, the focus over 2019-20 has growing Greater Western Sydney region, been on collaborating with stakeholders across connecting travellers from the new Western the three tiers of government, and industry, Sydney International (Nancy-Bird Walton) to undertake procurement and delivery phase Airport to the rest of Sydney’s public transition activities, to support the timely transport system. Both the Australian and delivery of a fast, safe and reliable metro. NSW governments have a shared objective of The formal planning process for the project having Sydney Metro – Western Sydney Airport is now underway, with early construction operational when Western Sydney International planned to commence later in 2020. 17 Airport opens for passenger services. The Sydney Metro – Western Sydney Airport project will provide a major economic stimulus for Western Sydney, creating 14,000 jobs during construction, including 250 new apprenticeships.

Independent project reviews The following independent reviews were undertaken in 2019-20.

Independent project reviews, 2019-20 Project

Sydney Metro – Western Sydney Airport

Sydney Metro West

Sydney Metro City & Southwest

Sydney Metro City & Southwest – Waterloo Integrated Station Development

Sydney Metro City & Southwest – Trains, Signalling, Operations and Maintenance

Sydney Metro City & Southwest – Southwest Metro Corridor and Bankstown Station upgrade

Sydney Metro City & Southwest – Crows Nest Station

Sydney Metro City & Southwest – Southwest Metro Corridor Stations Sydney Metro Sydney

Right: An artist’s impression of a Sydney Metro train. Achievements • 18 19 Sydney Metro Annual Report 19–20 • • • • Conservation Act 1999(Cth) (EPBC): Environment Protection andBiodiversity Planning andAssessment Act 1979 andthe were commenced undertheEnvironmental Metro State Significant project applications In addition,in2019-20 thefollowing Sydney • • • • Assessment Act 1979: under theEnvironmental Planningand State Significantprojects were approved In 2019-20, thefollowing Sydney Metro Project planningapprovals achieved significantoutcomes in2019-20. environmentally responsible way andwe have our activitiesinasocially, financiallyand Sydney Metro iscommitted to undertaking Sustainability andenvironment in recognition ofthesize oftheproject. Sydney Metro West isbeingdoneinstages * The environmental assessment process for Integrated Station Development. Integrated Waterloo the for signing contract the at adocument signs Lamonte, Jon Executive Chief Metro Sydney EPBC Referral –Western Sydney Airport. Sydney Airport State SignificantInfrastructure – Western State SignificantInfrastructure –Speedway Metro West Concept andStage 1project* State SignificantInfrastructure – Sydney Development. Waterloo Metro Quarter Over Station State SignificantDevelopment (Stage 1)– Pitt Street NorthOver Station Development State SignificantDevelopment (Stage 1)– Pitt Street SouthOver Station Development State SignificantDevelopment (Stage 1)– Administrative Modification Chatswood to Sydenham Modification 6– State SignificantInfrastructure – Practice’ and‘World Best Practice’, respectively. Design score whichrepresents ‘Australian Best and have eachachieved eithera5Star or6Star bespoke Sydney Metro Green Star rating tool Barangaroo) have beenassessed against the (Martin Place, Crows Nest, Victoria Cross and achieved for anISRating to date. Four stations (out ofapossible 110).This isthehighest score IS DesignLeading rating withascore of100 and Stations Excavation received afinal verified The Sydney Metro City&Southwest Tunnels Green Star, AsBuiltOffice Interiors rating. West Trains Facility alsoachieved a4Star of sustainability. The Sydney Metro North of Sydney Metro’s leadershipinthearea possible underISRating V1.0–1.2) isareflection Trains Stations). The Leading rating (highest Civil, Stations Viaduct CivilsandOperation Ratings from EarlyWorks, Tunnel Stations (IS) AsBuiltRating (incorporating theIS a whole-of-project Infrastructure Sustainability infrastructure project inAustralia to receive The Metro NorthWest Lineisthefirst mega at boththeDesignandAsBuiltstages. measure andmonitor sustainability performance verification rating tools are alsoused to project sustainability strategies. Third-party projects ismeasured against targets setoutin Sustainability performance onSydney Metro Sustainability

Construction is scheduled to start in 2020 on the Sydney Metro – Western Sydney Airport Project.

Environmental management Aboriginal cultural heritage and historic heritage All works for Sydney Metro are carried out in accordance with the relevant Sydney Metro City & Southwest project’s environmental requirements, In 2019-20 work began on analysing and as set out in the relevant planning approval reporting on significant archaeological finds and environment protection licences. recovered in 2018-19 from Sydney Metro Sydney Metro establishes the minimum City & Southwest sites at Central Station, acceptable environmental management Barangaroo, Waterloo, Blues Point and standards for construction-related activities Pitt Street. This work is feeding into the through our Construction Environmental development of Aboriginal and non-Aboriginal Management Framework, which applies to all interpretation planning for each station site. Principal Contractors that use this framework Reporting is expected to be completed in 2021. when developing Construction Environmental Work has continued to progress on the Management Plans and sub-plans. In 2019-20, conservation of the historic Barangaroo there were no significant environmental Boat timbers which are being treated at incidents (Class 1) on any operational and Sydney Metro’s conservation site. It is project sites. Compliance tracking was also anticipated that treatment will continue undertaken in accordance with the project’s for the next two to three years before the compliance tracking programs, and a total boat can be put on permanent display. of 31 non-compliances were recorded. The majority of the non-compliances related Sydney Metro West and Sydney Metro – to administrative / management system Western Sydney Airport issues and have been responded to in a As part of our planning approval timely manner. Other non-compliances documentation, Sydney Metro prepares related to noise and vibration; traffic, Aboriginal Cultural Heritage Assessment transport and access; and soil and water. reports, which provide an assessment of likely archaeology and methodologies for consultation with the Aboriginal community, excavation, research, and identification of final repositories. Work has commenced on the Sydney Metro West and Sydney Metro – Western Sydney Airport projects, both of which have potential for Aboriginal archaeology. Aboriginal cultural and archaeological values will be outlined in the Sydney Metro West and Western Sydney Airport Environmental Impact Statements.

Achievements • 20 21 Sydney Metro Annual Report 19–20 in thetablebelow. Achievements inminimisingtheuseofpotablewater in2019-20 construction activitiesare detailed systems orarecycled water network. of more than70 percent ofthewater neededfor operations from eitherrainwater harvesting potable water savings are realised. The Metro NorthWest Linehasbeendesignedto enablesourcing activities. Water efficiency measures are incorporated into alldesigns, toensure potableandnon- usage andusenon-potable(non-drinking)water sources for suitableconstruction andoperational Sydney Metro seeksto reduce water consumption, andencourages contractors to reduce water Water The tablebelow provides abreakdown for there-use ofwaste andspoil. (crushed rock) generated onprojects, andto recycle at least 95 percent ofconstruction waste. In 2019-20, Sydney Metro achieved our target to beneficially re-use 100per cent ofallcleanspoil Waste andspoil Resource management Re-use ofwaste andspoil,2019-20 Potable andnon-potablewater useinconstruction, 2019-20 Use ofsteel andconcrete, 2019-20 25,000 tonnes ofcarbondioxide emissions from concrete in2019-20. cementitious materials suchasflyashandgranulated ground blast furnace slaghave avoided over Metro projects. Limits ontheuseofPortland cement andminimumproportions ofsupplementary materials. Steel andconcrete make upasignificantproportion oftheembodiedcarbon Sydney Sydney Metro seeksto reduce ourconstruction footprint through efficientuseandselectionof Materials Generated Total used Percentage ofwater from non-potable source Total water consumption Non-potable Potable Reused orrecycled Percentage reused orrecycled Target demolition waste (tonnes) Construction and Steel (tonnes) Water usedfor construction (kilolitres) 44,769 43,658 28,319 98% 95% Concrete (cubic metres) (tonnes) 2,087,426 2,087,426 308,494 239,006 805,802 497,308 Spoil 100% 100% 38% Climate resilience Delivery partner initiatives

Sydney Metro aims to deliver and operate a These included: public transport network that is resilient to • setting up Return and Earn bottle schemes the challenges of climate change. All projects across various Sydney Metro construction are required to carry out a climate-change risk sites, with proceeds going to charity assessment in line with the Transport for NSW Climate Risk Assessment Guidelines throughout • engaging in social enterprises which support the design stages and to mitigate all extreme disadvantaged people and communities and high-rated risks and at least 25 per cent of • running a Christmas gift drive for a Women all medium-rated risks. and Girls’ Emergency Shelter In 2019-20 Sydney Metro undertook a review • painting, and installing room dividers in of the impact of extreme weather events on Foster House men’s shelter Metro North West Line operations. The findings of this review are expected in Q1 2021 and will • running food and clothing drives for inform ongoing planning, design and operations various charities activities. • clearing litter in neighbourhoods around project sites as part of World Clean-up Day Community • organising blood donation drives. Through our delivery partners, Sydney Metro seeks to benefit the local community both during and beyond the construction phase of our projects. Example initiatives undertaken in 2019-20 are listed below.

Sydney Metro internal initiatives

These included:

• The Sydney Metro City & Southwest Project Director, supported by various leaders across Sydney Metro, took part in the annual Vinnies CEO Sleepout on 18 June 2020, raising $19,973 for the homelessness charity

• Sydney Metro teams participated in the 100-kilometre Oxfam Trailwalker challenge, which together with other Transport for NSW teams raised more than $45,000 to help people in poverty.

Kellyville Station on the Metro North West line.

Achievements • 22 23 Sydney Metro Annual Report 19–20 excellence 3.2 Operational relevant government andregulatory authorities. the operator, othertransport agencies,andthe internal andexternal relationship building with and consolidated approach istaken, through To achieve theseobjectives acollaborative model withclearaccountabilities for outcomes. delivery, basedonastrong purchaser–provider and to focus onperformance andservice effective andfinancially responsiblemanner, reliable metro passenger services inanefficient, Sydney Metro’s key purposeisto deliver safe and agreed performance andsafety standards. provided by Sydney Metro, subjectto meeting for 15years withamonthlyservice payment Sydney (MTS), partoftheNRT consortium, West Lineiscontracted to Metro Trains responsibility for operating theMetro North September 2014. Underthosearrangements, Northwest RapidTransit (NRT), executed in under aPublicPrivate Partnership (PPP)with The Metro NorthWest Linewas largely delivered Operations management Metro NorthWest Line and forward-looking managementplans. data, productive andinclusive collaboration operational excellence we usereal-time To achieve ourstrategic objective of standard that meetscustomer aspirations. for themetro network, andstrive to achieve a we are guardians ofthecustomer outcomes While engagingwithouroperating partners, mode ofchoice. customer aspirations asa class standards andmeets service, achieves world- the metro, inoperational partners to ensure that We willwork withour of thechanges intravel behaviour. 2020-21 aswe gainabetter understanding expected that theforecast willberevised over travel behaviour inthepast few months. Itis our current understanding ofthechangesin has beenrevised to 14.1 milliontripsbasedon initial forecast of 31.2milliontripsfor 2020-21 mode shiftaway from publictransport. The from home continue to doso, withapotential 2020-21, where customers whoare ableto work have asignificantimpactonpatronage in public healthmeasures willcontinue to It isexpected that COVID-19 restrictions and restrictions andstudents returning to school. May 2020 asaresult ofthegradual easingof been anincremental increase inpatronage from in thelast week ofFebruary 2020. There has all-time highpatronage of539,000 recorded 2020, whichisless than 10percent ofthe trips was recorded for the week ending12April The lowest weekly patronage ofaround 51,000 restrictions andpublichealthmeasures. decline inpatronage resulting from theCOVID-19 following monthswas revised to reflect the At theendofMarch 2020, theforecast for the around 43percent lower thantheinitialforecast. pandemic. The patronage inMarch 2020 was implemented inresponse to theCOVID-19 was significantlyimpacted by the restrictions Patronage from mid-March 2020 onwards proper baseline. than 12monthsto beestablished for a noted that stable trends could take more 16.0 millionby 29February 2020. Itshouldbe forecast figures, where patronage reached patronage for 2019-20 was mostly inlinewith Up untiltheendofFebruary 2020, the highest patronage with503,000 trips. with thefollowing week recording thesecond recorded inthelast week ofFebruary 2020, service. Anall-timehighof539,000 tripswas with 2.21millioncustomers boarding ametro financial year was recorded inOctober 2019, The highest monthlypatronage for the Customer journeys • • • • • • • managing operations includes: The current scope ofSydney Metro in corridor protection. benefits realisation environment andsustainability asset management compliance andverification management customer outcomes commercial andperformance management PPP contract administration including Notes and caveats Climate change mitigation: energy efficiency and carbon offsets ‘Patronage’ for the purposes of Sydney Metro reporting is defined as the number of customers Sydney Metro is committed to reducing who board a metro service, whether they enter our operational carbon footprint through the station or transfer from other rail services. the specification of energy-efficient trains, operating systems and stations. In addition, Service performance a solar panel array (covering more than 6500 square metres) has been installed on the Overall service performance for 2019-20 has maintenance building roof at the Sydney Metro seen significant improvement in the three Train Facility at Tallawong and is being used measures that are currently reportable. to power the facility and adjacent station. These include Service frequency within one minute (approximately 98.5 per cent), Services Furthermore, Sydney Metro is committed Delivered (over 99 per cent) and Journey Time to offsetting 100 per cent of its residual below 37 minutes (around 94 per cent). operational electricity consumption. In 2019-20, the Metro North West Line operations The first five months of the 2019-20 financial consumed 85,766,741 kilowatt hours (kWh) of year was a period of bedding in and stabilisation electricity. This is being offset through a Green of operations on the Metro North West Line. Products Purchase Agreement with a solar The Metro North West Line service has matured farm – Beryl Solar Farm, in regional NSW, built over the year with improvements noted in in June 2019. A total of 85,767 Large-scale the timeliness, frequency and reliability of Generation Certificates generated by Beryl the service. In the five months to November Solar Farm will be surrendered to fulfil Sydney 2019, the service offering progressively Metro’s commitment to fully offset operational ramped up to achieve the commitment to electricity for this year of operation. This a turn-up-and-go service with a 37-minute agreement will continue to offset the Metro journey time from Tallawong to Chatswood, North West Line operations; and offset and a service every four minutes in the options will be explored for Sydney Metro peak and 10 minutes in the off-peak. City & Southwest operations. Delivery partners are also required to offset 25 per cent of Customer satisfaction electricity used during construction.

Throughout the year, Sydney Metro maintained consistently high ratings of customer satisfaction, particularly in the areas of accessibility, ticketing, timeliness, cleanliness, and safety and security. The overall customer satisfaction rate is 96 per cent.

Energy efficiency and carbon offsets, 2019-20 Electricity Tonnes of carbon Percentage offset consumed (KWh) dioxide equivalent commitment (tCO2e) before offset

Metro North West 85,766,741 77,190 100% Line operations

Sydney Metro City & Southwest 37,451,052 33,706 25% construction

Achievements • 24 25 Sydney Metro Annual Report 19–20 and publicspaces designedto encourage walking, cycling andsocialinteraction. the communities that they serve, supportingnew places for peopleto live, work andplay, create active precincts surrounding eachstation. Metro stations willbefocal pointsin Building new metro stations for Sydney provides anexciting opportunityto shapeand Precincts andplaces An artist’s impression of the proposed new plaza at Dulwich Hill. Dulwich at plaza new proposed the of impression artist’s An unique characters connected to theplace. stations to bringthemto life andcreate within precincts surrounding themetro ups. Publicarthoardings were also delivered and Playgroup NSW mothersgroup meet the MuseumofContemporary Art(C3West), arts community events incollaboration with program, food trucks,Christmas activities, events, includingTai Chi,‘Live Life GetActive’ used for avariety ofcommunity activitiesand late 2020. These temporary spaces have been adjacent to BellaVista station dueto openin to Tallawong Station, withanotherspace delivered atemporary publicspace adjacent program, Sydney Metro andLandcom As partoftheplace makingandactivation Temporary publicspaces andart workers onlow to moderate incomes. of 5percent affordable rental housing for for communities to enjoy, andaminimum The proposals includenew publicspaces (retail/commercial/community) floorspace. 180,000 square metres ofnon-residential (SSDAs) totalling over 9800dwellings and State SignificantDevelopment Applications have submitted applications for five major West Linedevelopment partnerLandcom, Sydney Metro, together withMetro‘s North Northwest precinct development enhanced places are describedbelow. Metro hasbeendoingto create new and Some examples ofthework Sydney of usesfor residents andvisitors to enjoy. the centre ofthecommunities withavariety somewhere to catch thetrain; they willbe Sydney Metro stations willbemore than urban designprinciplesandplace making, and upgraded publicspaces. Through planning, designingandmanagingnew Local communities are thefocal pointin interactions andboundless opportunities. comfortable andclean,that provide social are connected to theirsurroundings, are enhanced places that are easy to access, stations willhelpto create new and Sydney Metro’s new City&Southwest Sydney Metro City&Southwest An artist’s impression of the Victoria Cross Integrated Station Development.

Victoria Cross The project will also attract more shoppers and visitors and improve travel for locals The Victoria Cross Station Design and through enhanced transport connections Precinct Plan has received approval from such as kiss and ride bays, bus interchange the Department of Planning, Industry and areas and public bike parking facilities. Environment. The station precinct will be a major drawcard for visitors, workers and Lendlease has been awarded the contract to locals, creating a new pedestrian laneway and deliver the station component of the Victoria outdoor spaces in the heart of North Sydney. Cross Integrated Station Development in North Sydney – including new retail spaces It will also feature a three-storey retail and improvements to the public domain. building and dining and entertainment strip on Miller Street. New, adaptive open Dulwich Hill lawn areas could host future pop-up Sydney Metro will deliver a new public plaza events such as market stalls, food trucks along the southern side of Dulwich Hill Station. or other regular or temporary events. The new plaza is designed as a ‘social street’ The development aligns with North Sydney with seating, gathering areas and opportunities Council’s vision of Miller Street as a green, for public art. civic boulevard running north to south The design responds to the challenging through the heart of the urban centre. topography whist creating continuous Victoria Cross metro station will be a connections, level public spaces, and accessible catalyst for the continuing rejuvenation and connections across and along the rail corridor. re-invigoration of the North Sydney CBD. The landscape design of the plaza interprets the It will provide easier, faster public remnant Turpentine grassland vegetation and transport links, new retail offerings proposes new tree planting to reduce the urban and flexible public domain spaces that heat island effect. will enliven the urban precinct.

Achievements • 26 27 Sydney Metro Annual Report 19–20 • • • Our aimisto: • • • engagement isto: Our approach to communication and attractive hubswithintheirlocalcommunities. and inactivating precincts andplaces that are delivering withthecustomer at thecentre, Successful engagementisessential ingenuinely delivery andoperation ofourprojects. is acrucialelementinthesuccessful by thebeliefthat effective communication and thecommunity. This isunderpinned relationships withourcustomers, stakeholders We are committed to establishing robust transformation. sustainable, city-shaping our partnersto deliver our communities and We willcollaborate with engagement 3.3 Successful Sydney Metro projects. with stakeholders duringdelivery of communication activitiesandinterfaces provide consistency across ourexternal timely manner that identifiesandaddresses issues ina stakeholder andcommunity consultation provide adequate andcoordinated impacts from directly affected stakeholders address concerns aboutindividualproject and community issues. manage risksassociated withstakeholder general-public confidence inourprojects build key stakeholder, community and and thecommunity informed by engagementwithstakeholders deliver atransport service that hasbeen information isaseasy to access aspossible. moving forward, to ensure planning team willplanandundertake consultation COVID-19 pandemichave shapedhow the approach, thechallengesfaced through the will always beakey pillar oftheSydney Metro While traditional face-to-face consultation people duringtheexhibition period. successfully engagedwithmore than15,000 outreach. Through thisapproach, Sydney Metro by targeted community andstakeholder The digitalapproach was complemented and face-to-face engagement were not possible. environment where publicinformation sessions have asay onthiscity-shaping project inan that ensured peoplecould understand and implemented avirtualyet personalapproach into place. The team quicklydeveloped and shortly after theCOVID-19 restrictions came for publicexhibition andcommunity feedback Environmental ImpactStatement was released The Sydney Metro West Westmead to theBays alleviate concerns. community to answer questions and place managersworked closelywiththe both oftheseprocesses, theproject’s dedicated first Environmental Impact Statement. Through lodgement andpublicexhibition oftheproject’s Report andproperty acquisition, andthe West Project –therelease oftheScoping engagement activitiesfor theSydney Metro In 2019-20 Sydney Metro undertook two major to information through avariety ofplatforms. ensure ourdiverse communities have access Our approach continues to evolve aswe ways that are convenient and accessible. communicate andaccess information in the community andstakeholders want to digital engagement.We understand that face-to-face interaction where possible, and personal relationships, includingthrough Sydney Metro iscommitted to building opportunities for meaningfulengagement. can buildstrong relationships andcreate communities where they are basedsowe to achieve better outcomes. We meet community andstakeholder engagement needs andrefining ourapproach to delivering and communities, adaptingto community We have beenworking withstakeholders service providers; andkey stakeholders. local governments; contractors; advisors;other with thecommunity; Australian, NSW and Sydney Metro works closelyandcooperatively engagement Customer andcommunity For projects in the pre-delivery phase, Community engagement was also undertaken Sydney Metro has dedicated place managers. on the Blues Point tunnel access modification, These community relations specialists and the Bankstown Station modification. provide a vital link between the project and With face-to-face restrictions in place for the community, and are available to answer part of the year as a result of the COVID-19 questions and receive feedback and/or pandemic, new engagement approaches complaints during delivery of the project. – such as webinars and virtual community information sessions – were used in place On the Sydney Metro – Western Sydney of traditional in-person sessions. Airport project, the community was invited to participate in an online ‘Have Your Say’ The Sydney Metro City & Southwest project community survey in early 2020. The aim of team has also worked closely with the the survey was to provide people with the local community to achieve community opportunity to outline their priorities for public agreements that allow construction hours transport in Greater Western Sydney, and to and activities to be altered to better match provide feedback on future station precincts local community needs. At Hurlstone Park, as part of the project. Responses provided engagement was undertaken with local valuable insight into how the community residents to form a community agreement intends to use the new metro service, and that enabled out-of-hours work so children how best to keep the community informed at a local childcare centre would not be as about potential construction impacts. disrupted by the works. At Martin Place, a community agreement was extended to In 2019-20, Sydney Metro and our delivery enable additional construction hours so that partners on the Sydney Metro City & Southwest earthworks could be completed ahead of project undertook a range of consultation schedule and materials removed from site activities across the project alignment. This before peak hours to minimise further impacts. included exhibition and engagement for eight Station Design and Precinct Plans (Waterloo, Artarmon Substation, Central, Dulwich Hill, Marrickville, Campsie, Canterbury and Lakemba).

Sydney Metro hosted an interactive robotics workshop for children to learn about driverless train technology.

Achievements • 28 Government and industry We recognise the pivotal role played by engagement industry, and we are committed to the ongoing implementation of the NSW Construction Sydney Metro works closely with stakeholders Leadership Group’s Ten Point Commitment across Australian and NSW governments to to the Construction industry throughout our develop and deliver our program of work. commercial and project lifecycles, including We aim to develop long-term relationships procuring and managing projects in a more with a variety of partner agencies in the

Annual Report 19–20 Annual Report collaborative way. To this end Sydney Metro Transport cluster and others that have an has conducted a comprehensive program of interest in the delivery and benefits of market engagement and industry briefings to Sydney Metro. provide industry and potential participants Sydney Metro has always had close with transparency and key information on interdependencies with other government Sydney Metro projects as well as ensuring agencies. The health, productivity and value industry is offered early opportunity to provide of these relationships has been evidenced input to our projects. In 2019-20 the industry through successful cross-agency collaboration, engagement program included briefing events, during the development and lead up to market sounding meetings and other activities funding decisions for Sydney Metro West and for the Sydney Metro West and Sydney Sydney Metro – Western Sydney Airport. Metro – Western Sydney Airport projects.

The Sydney Metro – Western Sydney Airport In conjunction with the Construction Industry project is being developed by Sydney Metro in Leadership Forum, Sydney Metro has partnership with the Australian Government, commenced a pilot initiative to engage with Department of Infrastructure, Transport, and involve industry early in the selection of Regional Development and Communications, the procurement model and risk allocation and in collaboration with other Australian for one of its key packages, the Station and NSW government agencies (including Boxes and Tunnelling for Sydney Metro – Transport for NSW), and local government. Western Sydney Airport. The objective of 29 this pilot engagement is to promote greater collaboration between industry, Sydney Metro and the NSW Government, and to encourage the building of mutual expertise, capability and improved outcomes to support the delivery of Sydney Metro’s projects. Sydney Metro Sydney

Right: Trip planning on the Opal Travel app. Achievements • 30 31 Sydney Metro Annual Report 19–20 remains fit for purpose over thelong term. requirements, ensuring theorganisation and Sydney Metro’s long-term functional that best supportscross-business efficiency, and sustainable organisational structure to ensure that Sydney Metro hasanagile has beenimplemented andwas designed in 2019-20. The new organisation structure systems andgovernance was completed A review ofourorganisational structure, manage closelytheproject capitalbudgets. NSW Treasury andInfrastructure NSW to work inpartnershipwithTransport for NSW, responsibility have includedcontinuing to support thestrategic objective offinancial In 2019-20, Sydney Metro’s activitiesto successful business. responsibility andonoperating asa Sydney Metro hasastrong focus onfinancial Public Private Partnership for operations. and isthecounterparty to amulti-billion dollar investment program inexcess of$40billion, Sydney Metro provides stewardship ofacapital business success. outcomes, andoverall drive value for money commercial focus will Our financialand responsibility 3.4 Financial advisory groups withconstruction leaders. contractual mechanismsandconsultative greater workforce capability, including through number ofmechanismsto develop andpromote financial andgeographic scale, we leverage a the broader industry capacity. By virtueofour partners, andtogether contributing to growing partnership withhighlycapabledelivery We are alsocommitted to working in deliver to ourcommitments. construction project leadershipcapabilityto to have anongoingfocus onengineeringand programs have beenimplemented. We continue initiatives suchasmentoring andgraduate To supportbuildingkey internal capability, that are criticalto ourongoingsuccess. where we have identified roles andcapabilities to have ablendedandintegrated workforce structure andways ofworking, we continue Following reforms to ourorganisational deployment ofcapabilitiesandtalent. that supporttheflexible sourcing and pandemic, we have optimisedsystems and inresponse to theCOVID-19 As partofgoodbusiness practice workforce. diverse andinnovative and retaining atalented, committed to attracting At Sydney Metro we are capability 3.5 Workforce the construction industry. transferable skillsandincreased diversity in positive outcomes inthedevelopment of and industry-led initiatives, we have seen Participation plans,contractual requirements Development strategies, Aboriginaland Industry Through project-specific Workforce Metro North West Line. since thestart ofwork onthenow operational and thishasbeenakey focus for Sydney Metro to supportskillsdevelopment across industry, Our projects provide significantopportunities supply chain. a diverse andinclusive workforce and Sydney Metro iscommitted to developing Workforce development The Sydney Metro City & Southwest project is a demonstration pilot project for the NSW Infrastructure Skills Legacy Program, and Sydney Metro’s pre-employment program provides job opportunities to under-represented groups including the long-term unemployed and those impacted by COVID-19. The program has also delivered positive outcomes for women, with 12 per cent female participation, as well as 48 per cent Aboriginal People participation since the program was introduced in 2014.

Workforce diversity At Sydney Metro, we harness individual skills, perspectives and experiences. We deliver solutions in a changing environment while meeting the needs of the community we serve.

We recognise the benefits of how a diverse workforce strengthens an organisation through a broad range of skills and experiences that enable innovative opportunities.

Information about Sydney Metro’s workforce diversity is reported in accordance with the NSW Public Service Commission’s reporting requirements.

Workforce diversity, 2019-20

Workforce diversity group Benchmark 2018 2019 2020

Women in leadership positions 36.9% N/A 44.2% 35.7%

Aboriginal and/or Torres Strait 3%* N/A 0.6% 1.0% Islander Peoples

People with disability 2.3% N/A 0.6% 0.8%

* This benchmark represents a target for 2025 as per Transport for NSW’s commitment to the Premier’s Priority.

In 2019-20, Sydney Metro established a Diversity and Inclusion team. Its first initiative was creation of the Sydney Metro Diversity and Inclusion Plan, which seeks to integrate diversity and inclusion targets into mainstream business activities. It outlines four key focus areas to harness individuals’ unique skills, backgrounds, experiences and perspectives to expand our understanding of diversity and foster inclusion. These focus areas are women in leadership, Aboriginal employees, employees with disability, and increasing inclusion.

Sydney Metro is aligned to Transport for NSW’s commitment to reach 40 per cent women in leadership roles by 2025. As at 30 June 2020, 35.7 per cent of leadership positions at Sydney Metro were held by women. The performance to date shows a decline, predominantly due to the increase in the establishment of additional senior leadership positions to support the business delivery plans. Sydney Metro continues to implement plans that focus on increasing the representation of women in senior leadership positions.

We aim to have an overall representation target of 3 per cent Aboriginal employees in non-executive salary classes by 2025. As at 30 June 2020, 1.0 per cent of the workforce were Aboriginal employees.

Sydney Metro aims to achieve the Premier’s Priority target of 5.6 per cent of employees with disability by 2025. As at 30 June 2020, 0.8 per cent of the workforce were people with disability.

Sydney Metro ensures alignment to the Transport cluster activities and initiatives, and key significant dates for workforce diversity and inclusion have been acknowledged at Sydney Metro through a variety of internal communications channels.

With an invigorated and targeted focus on diversity and inclusion, Sydney Metro looks forward to driving the outcomes contained within the following plans over the next financial year:

• Sydney Metro Diversity and Inclusion Plan

• Transport for NSW Multicultural Plan

• Transport for NSW Reconciliation Action Plan

• Transport for NSW Disability Inclusion Action Plan

• Transport for NSW Aboriginal Participation Strategy.

Achievements • 32 33 Sydney Metro Annual Report 19–20 Our organisation and people Our organisation and people • 34 4.1 Our organisation structure

Sydney Metro Executive structure, 2019-20 Annual Report 19–20 Annual Report

Jon Lamonte Chief Executive

Offi ce of the Chief Executive

Executive Director General Counsel A/Chief of Staff Commercial Catrina Cresswell Gillian Higginson Jackie Aggett

Operations, Customer Projects & Placemaking Corporate Services Executive Director Executive Director Deputy Chief Executive Tim Parker Johanna Hall Rebecca McPhee 35 Sydney Metro Sydney

Previous page: Bella Vista Station. 4.2 Our executives

Sydney Metro Executives, 2019-20

Name Position Qualification

Jon Lamonte Chief Executive Bachelor of Science, Maths and Geology

Master of Arts, Defence Studies

Doctor of Philosophy, Modern History

Jackie Aggett Executive Director, Bachelor Commerce, Commercial Law and Commercial (from Applied Finance 23 September 2019) Graduate Australian Institute of Company Directors

Catrina Cresswell General Counsel Bachelor of Arts

Bachelor of Laws (LLB)

Ivan Glavinic Acting Deputy Bachelor of Science, Human and Economic Chief Executive Geography (to 27 August 2019) Master of Urban and Regional Planning (Hons)

Johanna Hall Executive Director, Bachelor Applied Science, Speech Pathology Corporate Services Graduate Certificate Human Resource Management: Training and Development

Graduate Certificate Applied Science: Psychology of Coaching

Graduate Australian Institute of Company Directors

Gillian Higginson Acting Chief of Staff Bachelor of Arts (Hons)

Doctor of Philosophy, English

Rebecca McPhee Deputy Chief Master of Arts (Hons), Economics and Social and Executive Political Sciences (from 28 August 2019)

Tim Parker Executive Director, Bachelor of Science (Hons), Environmental Projects Engineering

Our organisation and people • 36 37 Sydney Metro Annual Report 19–20 year oncluster-wide policies. Transport for NSW throughout the Sydney Metro hascollaborated with when they are amendedorreplaced. procedures continue to applyuntil a time Sydney Metro Group. These policiesand (executive andnon-executive) inthe documentation appliedto allemployees personnel policies,procedures andassociated From 1July 2018, Transport for NSW Personnel policiesandpractices Tribunal 2019 AnnualDetermination. and OtherOfficers Remuneration 2019 inaccordance withtheStatutory Executives was appliedfollowing 1July of Transport Service SeniorManagersand A 2.5percent increase to theremuneration commencing onorafter 1July 2020. allowances from the first fullpay period of 2.5percent for wages andrelated or after 1July2019, andafurtherincrease the first fullpay period commencing on and related allowances of2.5percent from The Award provides for anincrease to wages on 1July2018 oremployed thereafter. transferred to theSydney Metro Group to non-executive employees whowere on 16September 2019. The Award applies the NSW Industrial Relations Commission Award 2019 (theAward) was approved by Metro SalariesandConditions ofEmployment The Transport for NSW SalariesandSydney with theNSW Government Wages Policy. Sydney Metro employees moved inaccordance In 2019-20, salaries,wages andallowances for salaries orallowances Exceptional movements inwages, Sydney Metro workforce, comparison over three years since 2017 contracting team members. is asummaryofthegovernment team membersemployed at Sydney Metro anddoesnotinclude Sydney Metro operates withanintegrated workforce to deliver to ourcommitments. The tablebelow 4.3 Ouremployees As at 30June2020 Year As at 30June2019 As at 30June2018 As at 30June2017 106 Male (Grade 1–9) Salaried employees 74 56 34 133 Female 93 80 54 regular two-way communication. employees andtheirunionsfeatures partners. Informal consultation withour employees, customers andoperational of COVID-19 onensuringthe safety ofour reforms ofSydney Metro andtheimpacts implementation oftheevolving structural Committee. This hashadarecent focus on place through aquarterly JointConsultative Formal consultation withtheunionstakes and practices Industrial relations policies on ourcommuting transport network. Health andhaseasedsomeoftheburden social distancing measures advisedby NSW successfully maintainedourcompliance with arrangements. Remote working has members transitioned to remote working 2020, themajorityofSydney Metro team the COVID-19 pandemic.From mid-March safest possible working environment during Actions were implemented to ensure the COVID-19 pandemic Human resources impactsofthe 74 Male Senior Managers Transport Service 52 40 30 43 Female 34 21 17 employees full-time Total 350.3 248.4 192.5 132.0

Numbers and remuneration of senior executives In 2019-20, the percentage of total employee-related expenditure relating to senior executives was 39 per cent compared with 57.8 per cent in 2018-19.

Remuneration of Transport Service senior executives, 2019-20 Transport Senior Female Male Total Average of total Service Level remuneration package*

TSSE Band 1 or equivalent

2019–20 31 55 86 $254,762

2018–19 17 44 61 $250,528

TSSE Band 2 or equivalent

2019–20 11 22 33 $350,852

2018–19 4 19 23 $320,985

TSSE Band 3 or equivalent

2019–20 0 1 1 $538,125

2018–19 0 1 1 $525,000

2019–20 total 42 78 120

2018–19 total 21 64 85

*The average total remuneration package is based on annual salary data as at 30 June 2020.

Requirements arising from employment arrangements Employees at Sydney Metro are employed in the Transport Service. Personnel services are provided by the Transport Service of NSW. Personnel service expenses include salaries, wages, leave entitlements, superannuation, workers’ compensation insurance premiums, payroll tax, fringe benefits tax and redundancies.

The cutterhead of tunnel boring machine Mabel is lifted by crane out of the Sydney Metro Blues Point temporary retrieval site.

Our organisation and people • 38 39 Sydney Metro Annual Report 19–20 Corporate governance Corporate governance • 40 5.1 Sydney Metro Board

Sydney Metro is governed by a decision making Board. The Board governs Sydney Metro by setting its strategic direction, making key decisions, and appointing a Chief Executive to be responsible for the day-to-day management of Sydney Metro, and by providing direction, advice, guidance and Annual Report 19–20 Annual Report support to the Chief Executive. The Minister and the Secretary of Transport for NSW have rights to direct Sydney Metro; and to the extent of any inconsistency, any such direction prevails over a policy or direction of the Board.

The Sydney Metro Board is established in accordance with section 38F and Schedule 2B of the Transport Administration Act 1988 (TAA).

The Board must have a minimum of three and may have a maximum of eight directors, consisting of at least three and not more than seven directors appointed by the Minister; and one additional director that may be appointed by the Transport Secretary. One of the Minister’s appointees is to be specifically appointed by the Minister as the Board’s Chairperson.

Sydney Metro Board members, 2019-20

Name Position Qualification

Mr John Arthur Chairman LLB Hons

Mr John Barraclough Director Bachelor of Engineering (Civil) Hons

Mr Kerry (Bob) East Director MBA

41 Ms Thao Oakey Director Bachelor of Economics (Actuarial) Graduate of Australian Institute of Company Directors

Ms Gail Pemberton AO Director MA

Graduate Certificate in Finance

Fellow, Australian Institute of Company Directors

Ms Louise Thurgood Director MBA BA (Eco) Hons

Graduate Diploma in Finance Sydney Metro Sydney

Previous page: Tallawong Station. John Arthur, Chairman Gail Pemberton AO, Director

John Arthur is a highly experienced executive, Gail Pemberton’s executive career has had director and advisor across a broad range a central focus on technology, technology of industries, including experience as Chief intensive businesses, and financial services in Executive Officer (CEO) of Investa Property a variety of C-level roles. These included Chief Group, Chief Operating Officer of Westpac, Operating Officer UK at BNP Paribas Securities General Counsel of listed entities in two Services and CEO and Managing Director, BNP industries, Chairman of the legal firm Paribas Securities Services, Australia and New Gilbert + Tobin, adviser on governance and Zealand. Prior to BNP Paribas, Gail worked probity issues, and legal and commercial at Macquarie Bank for 20 years, holding the adviser to CEOs, chairmen, executive teams and role of the inaugural Group Chief Information boards. John became Chairman on 1 July 2019. Officer (CIO) for 12 years and subsequently as Chief Operating Officer (COO) of the Financial John Barraclough, Director Services Group. Gail’s current board roles include Non-Executive John Barraclough has decades of public and Director of Eclipx (ASX:ECX), Land Services private sector experience at a senior executive WA and Chair of Prospa (ASX:PGL). She has level in major infrastructure delivery, including previously served on a variety of boards over transport infrastructure. He is a member of the past decade, both ASX listed and unlisted, the Major Transport Infrastructure Board and in the private, public and not-for-profit Victoria and a member of the NSW Health sectors, variously as Board Chair, Remuneration Infrastructure Board, and was a member and Nomination Committee Chair and Risk of the Sydney Metro Assurance Board. Committee Chair, including Onevue (ASX:OVH), PayPal Australia, QIC, and the Sydney Opera Kerry (Bob) East, Director House Trust.

Bob East has more than 20 years’ experience Louise Thurgood, Director in the tourism, property and travel industry, most recently as CEO of the Mantra Group. Louise Thurgood has 25 years of experience Together with a passionate group of private in the banking, finance, and infrastructure investors, Bob created the Mantra Group, sectors, with extensive risk-management and over a period of 12 years shaped the experience extending across a wide range group to be Australia’s largest hotel and of industries including infrastructure, resort business, operating 140 hotels agriculture, construction, renewable predominantly under the Peppers and Mantra energy, mining and consumables. brands. Prior to this Bob worked with the Mirvac group on property development. Louise is currently a member of the Heritage Council of NSW, Non-Executive Director of Bob is the Chairman of Tourism Australia, Advance.Org, a member of Global Access and prior to this was Chairman of Tourism Partners National Standing Committee on the Events Queensland. He is Chairman of AVC Environment and Energy, and co-founder and Group with over 160 hotels and clubs in Director of Orion Mechanical Services. Past Australia and New Zealand, and Chairman of roles have included Moorebank Intermodal Experience Co (ASX). He is also Deputy Chair Company, Clearview Life Nominees and Chair of the Gold Coast Suns Football Club (AFL). of several not-for-profit boards.

Thao Oakey, Director

Thao Oakey has over 20 years of experience in major infrastructure financing, development and operations, with over 10 years in investment banking prior to undertaking senior executive roles at Leighton Contractors (as General Manager, Infrastructure Investments) and Sydney Motorway Corporation (as Chief Investment Officer). Thao has an in-depth understanding of project and structured finance, mergers and acquisitions, project risk allocation and risk management. Thao’s prior board experience includes Westlink M7, SA Health Partnership, Copperstring, WestConnex M4 and Wellington Gateway Partnership. Corporate governance • 42 43 Sydney Metro Annual Report 19–20 response to the world-wide COVID-19 pandemic. COVID-19 in world-wide to city the the across response trains onboard and stations Metro Sydney at cleaning extensive undertaking NSW for Transport Board andCommittee Meetingattendance, 2019-20 Sydney Metro Directors appointed, 2019-20 Each Director attended thefollowing meetingsoftheBoard anditsCommittees. Mr JohnBarraclough Ms Louise Thurgood PembertonMs Gail AO Ms Thao Oakey Mr Kerry (Bob) East Mr JohnArthur Ms Louise Thurgood PembertonMs Gail AO Ms Thao Oakey Mr Kerry (Bob) East Mr JohnBarraclough Mr JohnArthur Member Director eligible to Meetings attend 14 14 14 14 14 14 Board Meetings attended Term ofappointment 1 January2019 –31December 2023 1 July2020 –30June2023 (reappointed) 1 July2019 –30June2020 1 January2019 –31December 2023 1 July2020 –30June2023 (reappointed) 1 July2019 –30June2020 1 July2020 –30June2021 (reappointed) 1 July2019 –30June2020 1 January2019 –31December 2023 14 14 14 13 13 12 eligible to Audit andRisk Committee Meetings attend 5 5 5 – – – Meetings attended 4 4 5 – – – 5.2 Governance 5.3 Audit and framework risk management

Sydney Metro is a NSW Government agency Risk management at Sydney Metro is a within the Ministerial portfolio of the Minister significant part of organisational governance. for Transport and Roads. The Minister for It drives business performance and delivery Transport and Roads has ultimate accountability of project objectives safely and successfully. on behalf of the NSW Government for We are committed to continual improvement Sydney Metro’s program of work. in our risk management practices, and to building a strong risk culture to support The Sydney Metro Board sets the strategic our projects and operational success. and commercial direction for Sydney Metro. The Chief Executive of Sydney Metro reports Our Risk Management Framework complies to the Board, and is responsible for the with the requirements set out in the day-to-day management of Sydney Metro NSW Treasury Internal Audit and Risk and delivering the business strategy. Management Policy for the NSW Public Sector (TPP 15-03), and conforms to the Sydney Metro operates within the Australian and New Zealand Standard for general government sector, and is Risk Management (AS/NZS ISO 31000). administratively arranged within the Transport cluster. The Transport cluster’s Risk management is embedded in business principal agency is Transport for NSW. planning, project development and management processes. Sydney Metro applies A Collaboration Agreement between Sydney an enterprise-wide structured and accountable Metro and Transport for NSW describes the approach to ensure risks are proactively accountabilities of each agency and sets the identified and appropriately mitigated. Sydney framework for our relationship with our partners Metro adopts the Three Lines of Accountability in the Transport cluster. This agreement outlines model to risk ownership and oversight. Risks the obligations of both organisations and helps and mitigations are regularly reviewed and the Board prioritise its focus and direction for reported to the Sydney Metro Board. the Chief Executive. Sydney Metro’s risk management is subject to oversight by an Audit and Risk Committee chaired by an independent non-executive Chair. Sydney Metro makes decisions and takes actions that are in accordance with the risk appetite set by the Sydney Metro Board.

Corporate governance • 44 45 Sydney Metro Annual Report 19–20 24 September 2020 Sydney Metro Board Chairman, John Arthur • • • • during 2019-20 were: The ChairmanandMembersoftheAudit andRiskCommittee are independentto managementand Membership Audit andRisk Committee Internal auditfunction Risk managementframework Core requirements out intheInternal Audit andRiskManagementPolicy for theNSW PublicSector (TPP15-03): risk managementprocesses inoperation that are compliant withtheeightcore requirements set On behalfoftheBoard, IJohnArthur, amoftheopinionthat Sydney Metro hasinternal auditand for the2019-20 financial year for Sydney Metro Internal auditandriskmanagementattestation statement attestation statement and riskmanagement 5.4 Internal audit 3.3 3.2 3.1 2.3 2.2 2.1 1.2 1.1 Member, Louise Thurgood. Member, Pemberton Gail Member, JohnArthur Chairman, BobMcKinnon content ofthe’modelcharter’. The Audit andRiskCommittee hasaCharter that isconsistent withthe and control frameworks, anditsexternal accountability obligations. to theagency headontheagency’s governance processes, riskmanagement The Audit andRiskCommittee isanadvisorycommittee providing assistance been established. An IndependentAudit andRiskCommittee withappropriate expertise has of the‘modelcharter’. The agency hasanInternal Audit Charter that isconsistent withthecontent international standards for theProfessional Practice ofInternal Auditing. The operation oftheinternal auditfunctionisconsistent with the An internal audit functionhasbeenestablished andmaintained. ISO 31000.2009. established andmaintainedtheframework isconsistent withAS/NZS A riskmanagementframework that isappropriate to theagency hasbeen management intheagency. The agency headisultimately responsible andaccountable for risk Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant 5.5 Cyber Security 5.6 Insurance Policy attestation Sydney Metro procures project-specific delivery phase insurances for the Sydney Cyber security annual attestation Metro City & Southwest project from statement for the 2019-20 financial the commercial insurance market. This year for Sydney Metro includes the following insurances:

I, Jon Lamonte, am of the opinion that • contract works: physical loss or damage to Sydney Metro has managed cyber security the works risks in a manner consistent with the • delay in start-up: loss of revenue (service Mandatory Requirements set out in the payments payable to NRT) following a delay NSW Government Cyber Security Policy. to completion arising from insurable damage In line with the NSW Government Cyber • public liability: legal liability to third parties Security Policy, Sydney Metro has identified for personal injury or property damage its critical assets and has an ongoing program arising out of the works. of work to identify and assess the changing security threats, manage new and current Other project insurances such as professional risks and implement appropriate controls. indemnity, workers’ compensation and motor vehicle insurance are procured by A mix of reviews, independent audits and the appointed contractors for the delivery certifications of the Agency’s ISMS were contracts underway and commencing in the undertaken, in addition to reporting against future. These insurances cover the insurable the Mandatory Requirements of the NSW interests of Sydney Metro where applicable. Government Cyber Security Policy and found to be adequate or findings being addressed Operations phase insurances for the Metro through the program of work as appropriate. North West Line are procured by, or on behalf of NRT in accordance with the Operations, This attestation covers the following Trains and Systems Project Deed. These agencies: Sydney Metro. insurances include property damage, public liability, and professional indemnity insurance, which cover Sydney Metro for our insurable interests where applicable.

Notifications of claims made by contractors Jon Lamonte and operators are accepted by insurers Chief Executive, as a notification by Sydney Metro, such Sydney Metro that its notification obligations are met. In the event of an insurance claim under 13 August 2020 the project insurances, contractors and operators deal directly with insurers and loss adjusters and are required to keep Sydney Metro informed of all developments.

Sydney Metro also uses the NSW Treasury Managed Fund for our direct insurance requirements (non-project related insurances) including property damage, workers’ compensation, public liability and miscellaneous items. In 2019-20 there were no material claims made against any of these insurance categories under the NSW Treasury Managed Fund.

Corporate governance • 46 47 Sydney Metro Annual Report 19–20 Reporting and disclosure Reporting and disclosure • 48 6.1 Community 6.2 Work Health satisfaction and Safety

Sydney Metro takes Health and safety performance customer and community Summary of health and safety Annual Report 19–20 Annual Report performance for Sydney Metro feedback seriously Measure 2018-19 2019-20 and continually looks Number of events 14 18 for opportunities to reported

incorporate suggestions Lost Time Injuries due 0 0 and ideas for improvement. to workplace-related injury or illness

In 2019-20 Sydney Metro received 783 Prosecutions reported 0 0 complaints. The most common issues were noise, vibration impacts, and feedback on elements of project design. The majority Summary of health and safety of construction complaints were received through the projects’ 24-hour phone numbers. performance for Sydney Metro’s Complaints are investigated and responded principal contractors to in a timely manner, generally within three Measure 2018-19 2019-20 days. Changes that may result from these investigations include changes to construction Number of Significant 193 93 planning and methodology to minimise ongoing Incidents reported* 49 impacts (for example, different equipment Lost Time Injuries due 13 10 used, timing and days of work changed to workplace-related where possible). In some cases, alternative injury or illness accommodation and respite vouchers were offered to further minimise impacts. Prosecutions reported 0 0

On the Metro North West Line, Sydney Metro *Note: Number includes events resulting in actual has maintained consistently high ratings of significant consequence as well as incidents customer satisfaction throughout 2019-20, with with potential for Significant Incidents. a customer satisfaction rating of 96 per cent. The service is delivering high ratings particularly The health and safety performance of Sydney in the areas of accessibility, ticketing, timeliness, Metro and our delivery partners is monitored by cleanliness, and safety and security. the Sydney Metro Board. The Board is briefed monthly on health and safety performance, and also receives more detailed reviews on topics including significant incidents that may have occurred across our projects and Sydney Metro’s wellbeing program. Sydney Metro Sydney A Metro North West station staff member helps a customer with wayfinding information.

Previous page: Bella Vista Station. Initiatives 6.3 Research and During 2019–20, the Sydney Metro Health and Safety team delivered the following initiatives development to improve the health and safety of our people and delivery partners across our projects: There were no research and development activities undertaken by Sydney Metro • development of our Health and Safety Model in 2019-20. and messaging

• definition of our client model in health and safety to better inform decision making across the organisation 6.4 Access to

• identification of our health and safety Government initiatives for 2019-20 which included Leadership, Wellbeing, Silica, Critical Risks information and Heavy Vehicle. Each of these initiatives had a detailed stream of work and Government Information executive sponsors to ensure positive (Public Access) Act 2009 outcomes were achieved Under Section 7 of the Government • launch of the Sydney Metro Information (Public Access) Act 2009 (GIPA Wellbeing program Act), agencies must review their programs for the release of government information • improvements to the audit program and to identify the kinds of information that can function for 2019-20 be made publicly available. This review must • external recognition through industry awards be undertaken at least once annually. (Australian Institute of Health & Safety, Sydney Metro makes a range of SafeWork NSW and Australian Construction information available on our website Association) about our operations including: • achievement of the International Standard • details of Sydney Metro projects and for Occupational Health and Safety progress Management (ISO 45001) certification. • construction information for stations and other infrastructure Further improvements to health and safety performance • information about planning for future Sydney Metro projects Sydney Metro has initiated work on a strategic long-term vision for health and safety across • education resources and updates with our projects, and more broadly, the positive a focus on information for primary and impact we can have as a major infrastructure secondary school teachers and students client across the construction sector. This vision • a document library for access to publications, will underpin the work of the health and safety reports, media releases and planning team over the next five years. documents concerning Sydney Metro

• interactive maps, images and video content.

Reporting and disclosure • 50 51 Sydney Metro Annual Report 19–20 Schedule 4to theGIPA Act) abouttheapplicant (theapplicant beinganindividual). **A personalinformation application isanaccess application for personal information (as definedinclause4 in relation to eachsuchdecision. * More thanonedecisioncanbemade inrespect ofaparticularaccess application. Ifsoarecording must bemade Table B:Numberofapplications by typeofapplication andoutcome, 2019-20 in relation to eachdecision. * More thanonedecisioncanbemadeinrespect to aparticularaccess application. Ifso, arecording must bemade Table A:Numberofapplications by typeofapplicantandoutcome, 2019-20* the information requested was information referred to inSchedule1to theGIPA Act. Of thetotal numberofaccess applications received, Sydney Metro refused five applications because withdrawn applications butnotinvalid applications). During thereporting period,Sydney Metro received atotal of32access applications (including Requests for access applications applications) information (other thanpersonal Access applications applications** Personal information Media requested information Type of Type ofapplicant partly other applications and personal information that are partly Access applications business Private sector Parliament Members of legal representative) public (application by Members ofthe public (other) Members ofthe community groups organisations or Not-for-profit 11 0 0 0 0 3 5 2 Access granted 1 Access granted in full in full 0 0 0 0 0 0 4 3 Access granted 1 Access granted in part in part 0 0 0 0 0 0 0 2 Access refused 2 Access refused in full in full 10 0 0 0 0 0 0 5 Information not 5 Information not held held 0 0 0 0 0 0 0 1 Information 1 Information already available already available 0 0 0 0 0 0 4 3 Refuse to deal with 1 Refuse to deal with application application

Refuse to confirm/ Refuse to confirm/ 0 0 0 0 0 0 0 0 0 deny whether deny whether information is held information is held 0 0 0 0 0 0 0 0 Application 0 Application withdrawn withdrawn Table C: Invalid applications, 2019-20 Reason for invalidity* Number of applications

Application does not comply with formal requirements (section 41 of the GIPA Act) 5

Application is for excluded information of the agency (section 43 of the GIPA Act) 0

Application contravenes restraint order (section 110 of the GIPA Act) 0

Total number of invalid applications received 5

Invalid applications that subsequently became valid applications 4

Table D: Conclusive presumptions of overriding public interest against disclosures: matters listed in Schedule 1 of the GIPA Act, 2019-20 Consideration category/type Number of times consideration used

Overriding secrecy laws 0

Cabinet information 3

Executive Council information 0

Contempt 0

Legal professional privilege 0

Excluded information 0

Documents affecting law enforcement and public safety 0

Transport safety 0

Adoption 0

Care and protection of children 0

Ministerial code of conduct 0

Aboriginal and environmental heritage 0

Information about complaints to Judicial Commission 0

Information about authorised transactions under Electricity Network 0 Assets (Authorised Transactions) Act 2015

Information about authorised transaction under Land and Property 0 Information NSW (Authorised Transaction) Act 2016

More than one public interest consideration may apply in relation to a particular access application and, if so, each consideration is to be recorded (but only once per application).

Reporting and disclosure • 52 53 Sydney Metro Annual Report 19–20 decision hasbeenmade. the originaldecisionmaker. The data inthiscaseindicates that arecommendation to vary orupholdtheoriginal The Information Commissioner doesnot have theauthorityto vary decisions,but canmaderecommendations to review andoutcome), 2019-20 Table G:Numberofapplications reviewed underPart 5oftheGIPA Act (by typeor Table F:Timeliness ofdecision,2019-20 consideration isto berecorded (butonlyonce perapplication). More thanonepublicinterest consideration may applyinrelation to aparticularaccess application and,ifso, each to section14oftheGIPA Act, 2019-20 Table E:Otherpublicinterest consideration against disclosure: matters listed intable Total Administrative Tribunal Review by NSW Civiland of theGIPA Act recommendation undersection93 Internal review following Review by Information Commissioner Internal review Type ofreview Total Not decidedwithintime(deemed refusal) Decided after 35 days (by agreement withapplicant) Decided withinthestatutory timeframe (20days plusany extensions) Timeliness ofdecision Exempt documentsunderinterstate Freedom ofInformation legislation Secrecy provisions Environment, culture, economy andgeneral matters Business interests ofagenciesandotherpersons Individual rights,judicialprocesses andnatural justice Law enforcement andsecurity Responsible andeffective government Consideration category/type 4 0 0 3 1 Decisions varied 6 0 1 3 2 Decisions upheld not successful when application Number ofoccasions 0 0 0 3 2 1 2 27 0 2 25 applications Number of 10 0 1 6 3 Total Table H: Applications for review under Part 5 of the Act (by type of applicant), 2019-20

Type of applicant Number of applications for review

Applications by access applicants 9

Applications by persons to whom information on the subject of access 1 application relates (see section 54 of the GIPA Act)

Table I: Applications transferred to other agencies under Division 2 of Part 4 of the GIPA Act (by type of transfer), 2019-20 Type of transfer Number of applications transferred

Agency-initiated transfer 0

Applicant-initiated transfer 0

6.5 Overseas travel

Overseas visits by employees and officers There was no overseas travel undertaken in 2019-20.

Reporting and disclosure • 54 55 Sydney Metro Annual Report 19–20 costs andunpaidrent for the perioditstayed inoccupation after theacquisition. Sydney Metro for theacquisition, andordering theappellantandits director to pay Sydney Metro’s The Court found infavour ofSydney Metro, ordering that nofurther compensation was payable by verifiable nor reliable, and was “replete withinconsistencies anduntruths”. substantiate its$45.7 millionclaimfor business relocation andloss offuture profits was not The Court accepted Sydney Metro’s submissions, findingthat theappellant’s evidence to Metro (then Transport for NSW) for theSydney Metro City &Southwest project. General’s determination ofcompensation for aleaseholdinterest compulsorily acquired by Sydney Decision oftheLandandEnvironment Court on29May 2020, following anappealoftheValuer- LtdUTSG Pty vSydney Metro (No6)[2020] NSWLEC 63 on orfrom it. tenants andtherefore they didnotthemselves occupy thelandnorconduct any business activities land andreceiving rental income, theformer owners hadgiven exclusive rightsofoccupation to the appellants that would entitlethem to any compensation for disturbance because, inleasingthe The Court ofAppealdismissed theclaim,andfound that there was no“actual useofland”by the instead themarket value was theunpaidpurchase price dueunderthecontracts for sale. The appellantsclaimed,inpart,that themarket value onthedate ofacquisition was notrelevant, but extended settlementperiods. for theWestConnex Stage 3M4/M5 Linkproject, whichwere thesubjectofcontracts for salewith The proceedings related to aclaimofcompensation following theacquisition ofthree properties (G CapitalCorporation Ltd Pty vRoadsandMaritimeServices [2019] NSWLEC 12). Decision oftheCourt ofAppealon24 September 2019, onfrom theLandandEnvironment Court G CapitalCorporation Ltd Pty vRoadsandMaritimeServices [2019] NSWCA 234 to disturbance asitdidnotrelate to theactualuseoflandby theformer owner. value whichcould have beenextracted from the continued ownership ofthelandwas notaloss due was nomarket for theresource onthelandwithoutproject. Additionally, theCourt heldthat the increase inthevalue oftheproperty resulting from thecarryingoutofpublicpurpose, asthere The Court ofAppealdismissed theappeal,findingprimaryjudge was correct to disregard any the resource excavated from theacquired landandusedintheconstruction ofthehighway. Highway upgrade project. The appellantargued regard shouldhave beengiven to lost royalties for The proceedings related to aclaimofcompensation following theacquisition oflandfor thePacific (Apokis vRoadsandMaritimeServices [2017] NSWLEC 163). Decision oftheCourt ofAppealon13March 2020, onappealfrom theLandandEnvironment Court Apokis vTransport for NSW [2020] NSWCA 39 rezoning andthepublicpurpose, theeffect onmarket value must beignored. connected to thedraft PRUTS, andthat where there isadirect relationship between potential and timingofany future rezoning was uncertain, that theacquisition ofthelandwas intrinsically The Court ofAppealdismissed theappeal,finding evidence demonstrated that thelikelihood Parramatta Road Urbantransformation Strategy (PRUTS). that theacquired landmay have beenrezoned to allow denserdevelopment asaresult ofthedraft WestConnex M4East Project. The appellantsargued regard shouldhave beengiven to thepotential The proceedings related to aclaimofcompensation following theacquisition oflandfor the (Barkat vRoadsandMaritimeServices [2018] NSWLEC 209). Decision oftheCourt ofAppealon11October 2019, onappealfrom theLandandEnvironment Court Barkat vRoadsandMaritimeServices [2019] NSWCA 240 Significant judicialdecisionsaffecting Sydney Metro, 2019-20 6.6 Legal change Acts and subordinate legislation affecting Sydney Metro

Government Sector Employment Act 2013

• Government Sector Employment (General) Rules 2014 • Government Sector Employment Regulation 2014 • Government Sector Employment (Transport Service Senior Executives) Rules 2017

Government Sector Finance Act 2018

• Government Sector Finance Regulation 2018

Heavy Vehicle (Adoption of National Law) Act 2013

• Heavy Vehicle (Adoption of National Law) Regulation 2013

Heavy Vehicle National Law (NSW)

• Heavy Vehicle (Fatigue Management) National Regulation (NSW) • Heavy Vehicle (General) National Regulation (NSW) • Heavy Vehicle (Mass, Dimension and Loading) National Regulation (NSW) • Heavy Vehicle (Registration) National Regulation (NSW) • Heavy Vehicle (Transitional) National Regulation (NSW) (expired 01.07.2018) • Heavy Vehicle (Vehicle Standards) National Regulation (NSW)

Passenger Transport Act 1990

• Passenger Transport (Drug and Alcohol Testing) Regulation 2010 • Passenger Transport (General) Regulation 2017

Passenger Transport Act 2014

• Passenger Transport Regulation 2014

Rail Safety (Adoption of National Law) Act 2012

• Rail Safety (Adoption of National Law) Regulation 2018

Rail Safety National Law (NSW)

• Rail Safety National Law National Regulations 2012 (South Australian Regulations adopted for NSW under the Rail Safety National Law (NSW))

Transport Administration Act 1988 • Transport Administration (General) Regulation 2018 • Transport Administration (Staff) Regulation 2012

Transport Administration Amendment (RMS Dissolution) Act 2019

Reporting and disclosure • 56 57 Sydney Metro Annual Report 19–20 NSW legislation website 12.06.2020)) South Wales) commenced 01.07.2020 (Commencement Proclamation 2020 No254published (Assent 11.04.2017; un-commenced provisions (mainlyre Transport Asset HoldingEntityofNew Transport Administration Amendment(Transport Entities) Act 2017 (Act 2017 No12) commenced 14days after thedate ofassent) on date ofassent; relevant partsofSchedule2(Schedule2.20RailSafety National Law (NSW)) Transport Act 2013 No18;Schedule1.25Transport Administration Act 1988No109)commenced parts ofSchedule1(Schedule1.15 Passenger Transport Act 2014 No46;Schedule1.20Road National Law (NSW)) commenced 14days after thedate ofassent) (Assent 21.11.2019; relevant No 109)commenced ondate ofassent; relevant partsofSchedule2(Schedule2.20RailSafety Schedule 1.20Road Transport Act 2013 No18;Schedule1.25Transport Administration Act 1988 (Assent 21.11.2019; relevant partsofSchedule1(Schedule1.15 Passenger Transport Act 2014 No46; Statute Law (Miscellaneous Provisions) Act (No2)2019 (Act 2019 No14) (Assent 17.06.2019; relevant parts(Sch.1.11 &1.16) commenced on01.07.2019)) Statute Law (Miscellaneous Provisions) Act 2019 (Act 2019 No1) Government Gazette No26of06.06.2019 p1754) (Assent 11.04.2019; commenced on01.07.2019 -Commencement Proclamation SouthAustralian adopted by Safety theRail (Adoption of National Law) Act 2012 (NSW). SafetyRail National Law (SouthAustralia) Act 2012 (SA) which,asamendedfrom timeto time, is (This SouthAustralian Act Safety amendstheRail National Law assetoutintheScheduleto the Act No4of2019) SafetyRail National Law (SouthAustralia) (Miscellaneous) AmendmentAct 2019 (SouthAustralia New Acts andamendmentsto Acts assented to orcommenced during2019-20 New subordinate legislation and amendments to subordinate legislation made or commenced during 2019-20

Heavy Vehicle (Adoption of National Law) Amendment (Penalties) Regulation 2019 (2019 No 258)

(Published NSW legislation website 21.06.2019; commenced on 01.07.2019)

Rail Safety National Law National Regulations (Fees) Variation Regulations 2019 (2019 No 262)

(South Australian Regulations applicable to NSW; published NSW Legislation website 21.06.2019; commenced on 01.07.2019)

Rail Safety National Law National Regulations Variation Regulations 2019 (2019 No 263)

(South Australian Regulations applicable to NSW; published NSW Legislation website 21.06.2019; commenced on 01.07.2019)

Rail Safety National Law National Regulations (Application of Law) Variation Regulations 2019 (2019 No 539)

(South Australian Regulation; published NSW Legislation website 08.11.2019; commenced on commencement of section 118 of the Rail Safety Legislation Amendment (National Services Delivery and Related Reforms) Act 2019 (Victoria), or the date the regulations are made, whichever occurs later – 02.12.2019)

Heavy Vehicle National Amendment Regulation 2019 (2019 No 583)

(Queensland Regulation; published NSW Legislation website 29.11.2019; commenced on 10.12.2019)

Heavy Vehicle (Adoption of National Law) Amendment (Penalties) Regulation 2020 (2020 No 41)

(Published NSW Legislation website 14.02.2020; commenced on commencement of Part 3 of the Heavy Vehicle National Law and Other Legislation Amendment Act 2019 (Queensland) – Commencement Proclamation 2020 No 18 notified on the Queensland legislation website 21.02.2020 – commenced 28.02.2020)

Heavy Vehicle National Legislation Amendment Regulation 2020 (2020 No 61)

(Queensland Regulation; published NSW Legislation website 21.02.2020; commenced on 28.02.2020)

Rail Safety (Adoption of National Law) Amendment (Drug and Alcohol Testing) Regulation 2019 (2020 No 89)

(Published NSW Legislation website 13.03.2020; commenced on day published)

Heavy Vehicle (Adoption of National Law) Amendment (Penalties) Regulation (No 2) 2020 (2020 No 278)

(Published NSW legislation website 19.06.2020; commenced on 01.07.2020)

Rail Safety National Law National Regulations (Fees and Other Measures) Variation Regulations 2020 (2020 No 322)

(South Australian Regulations applicable to NSW; published NSW Legislation website 26.06.2020; commenced on 01.07.2020)

Disclosure of controlled entities

Sydney Metro had no controlled entities as at 30 June 2020.

Disclosure of subsidiaries

Sydney Metro had no subsidiaries as at 30 June 2020.

Reporting and disclosure • 58 59 Sydney Metro Annual Report 19–20 Operations Trains and Systems of the Sydney Metro City &Southwest. City the Metro for Sydney the of Systems and Trains partnership private Operations a public, creating Place, Martin in lawyers Ashurst of offices the at signed are Contracts Consultants engaged,2019-20 6.7 Payment to consultants Government e-Tendering website. Sydney Metro disclosestheengagementofallprofessional services over $150,000, ontheNSW Gilbertson Paul Richard Consultant Services Ltd Pty Management Synergy John Yates Category Advisory Services Strategic Advisory Services Strategic Advisory Services Strategic Project Chief Executive Office ofthe Chief Executive Office ofthe Chief Executive Office ofthe (2019-20) Actual cost $48,400 $19,425 $3,300 cost contract Total $390,205 $48,400 $147,788 engagements Total no. 1 6.8 Public interest 6.9 Privacy disclosures Management Plan

No public interest disclosures were made to Privacy and Personal Information Sydney Metro in 2019-20. Protection Act 1998 In compliance with section 6D(1) of the In compliance with section 33 of the Privacy and Public Interest Disclosures Act 1994, Personal Information Protection Act 1998 (PPIP Sydney Metro has a policy that sets outs Act), Sydney Metro has a Privacy Management its procedures for receiving, assessing and Plan which includes information about: dealing with public interest disclosures. (a) the devising of policies and practices to Actions taken to ensure staff awareness of ensure compliance with the requirements responsibilities under section 6E(1)(b) of the of the PPIP Act and the Health Records Act have been met including: and Information Privacy Act 2002

• the Sydney Metro Public Interest Disclosure (b) the dissemination of those policies and Procedure, list of Nominated Disclosure practices to persons within Sydney Metro Officers and Transport Code of Conduct are published on the Sydney Metro intranet (c) the procedures that Sydney Metro applies in relation to internal review • training has been conducted for Nominated under Part 5 of the PPIP Act. Disclosure Officers The plan is available on our website • a fraud and corruption e-learning module sydneymetro.info/privacy-policy (mandatory for all new starters) provides information on public interest disclosures. Questions, compliments or complaints about the management of personal and health information should be directed to the Privacy Officer at Transport for NSW, who will direct the inquiry to Sydney Metro.

Post The Privacy Officer Information and Privacy Unit Transport for NSW PO Box K659 Haymarket NSW 1240

P 02 8202 3768

E [email protected]

During 2019-20, Sydney Metro received one application for internal review under Part 5 of PPIP Act. The internal review determined that Sydney Metro had not breached any of the information protection principles in the PPIP Act and that Sydney Metro would take no further action on the matter.

Reporting and disclosure • 60 61 Sydney Metro Annual Report 19–20 policies andservices 6.10 Multicultural with Multicultural NSW. Sydney Metro doesnothave any agreements Agreements withMulticultural NSW relate to this plan to enableitssuccess. focus, andiscommitted to theactivities that NSW Multicultural Plancontinues to beakey Sydney Metro willensure that theTransport for • • • have included: initiatives. Those programs andinitiatives within itthrough various programs and plan, inadditionto addressing actionscontained reporting framework inaccordance withthis In 2019-20, Sydney Metro implemented a from CALDbackgrounds inleadershippositions. (CALD) communities andto supportwomen needs ofCulturally andLinguistically Diverse were deferred to ensure we responded to the throughout theCOVID-19 pandemic.Noactions to bedelivered aspartoftheMulticultural Plan Sydney Metro remained focused ontheactions Plan inalignmentwithFuture Transport 2056. 13 specificactionssetoutintheMulticultural cluster isresponsible andaccountable for the Each divisionandagency intheTransport defined outcomes. – itisanagileandactionableplanwithclearly multiculturalism inNSW ismore thanapolicy with State andnational prioritieswhichensure and linguistically diverse communities. Italigns strengthening transport services for culturally Transport cluster strategies andcommitment to (the Multicultural Plan),whichoutlinesthe for NSW Multicultural Plan2019-2020 Sydney Metro isalignedto theTransport services program Multicultural policiesand intranet page. NSW viathe diversity andinclusion Service Guidelinesissued by Multicultural promotion andaccess to theLanguage promotion ofunconscious biastraining cultural events acknowledgement andpromotion of

its success. activities that relate to thisplanto enable to beakey focus andiscommitted to the NSW Disability InclusionAction Plancontinues Sydney Metro willensure that theTransport for • • • initiatives, including: within itthrough various programs and plan inadditionto addressing actionscontained reporting framework inaccordance withthis In 2019-20, Sydney Metro implemented a Transport 2056. Plan 2018–2022 inalignmentwithFuture actions setoutintheDisabilityInclusionAction and agency isaccountable for the137 specific Within theTransport cluster eachdivision social opportunities. housing, education, training, employment and equal access to information, services, transport, in thecommunity that prevent themgaining disabled by theirimpairmentbutby thebarriers model views peoplewithdisabilityasnotbeing the RightsofPersons withDisabilities.The social outlined intheUnited Nations Convention on plan isguidedby thesocialmodelofdisability, Other thancompliance withlegislation, the obligations undertheTransport Standards. will alsoassist Transport for NSW to meetits of theDisabilityInclusionAct. These measures cluster to meettheobjectives andprinciples measures to betaken across theTransport Inclusion Action Plan,whichoutlinespractical aligned withtheTransport for NSW Disability Inclusion Action Plans.Sydney Metro is government departmentsto develop Disability The DisabilityInclusionAct 2014requires all Action Plan 6.11 DisabilityInclusion that supportthisplan. via thediversity andinclusionintranet page promotion andaccess to tools andresources Disability Awareness training promotion ofthePublicService Commission significant dates acknowledgement andpromotion of 6.12 Land disposal

Sydney Metro acquires and holds properties to construct major projects in accordance with our functions under the Transport Administration Act 1988. After completing projects, subject to land not being required for operational purposes, the assets are either transferred to other government agencies for approved functions or divested in accordance with government guidelines.

There were no sales of property with a value of greater than $5 million during 2019-20 that were not sold by public auction or tender.

The following residual land disposal transactions were undertaken during 2019-20:

• Tallawong South – Deicorp Projects Tallawong Station Pty Ltd (Put and Call Option)

• Hills Showground – Deicorp Projects Showground Pty Ltd (Put and Call Option).

Commuters travelling from Hills Showground Station, on Sydney Metro’s North West Line.

Reporting and disclosure • 62 63 Sydney Metro Annual Report 19–20 payments andgrants 6.13 Accounts following period. Note: negative figures represent timingdifferences inthebilling cycle that are expected tobe corrected inthe Outstanding invoices by ageat theendofeachquarter, 2019-20 Current (i.e. withinduedate) Suppliers Measure Less than30days overdue overdue Between 30and60days overdue Between 60and90days More than90days overdue Current (i.e. withinduedate) Small business suppliers Less than30days overdue overdue Between 30and60days overdue Between 60and90days More than90days overdue average 2019-20 quarter Financial year -0.75 M -0.75 0.00 M 0.00 0.00 M 0.00 0.00 M 0.00 0.00 M 0.00 14.91 M 0.47 M 3.45 M 0.37 M 0.15 M -0.05 M 21.95 M 0.00 M 0.00 0.00 M 0.00 0.00 M 0.00 0.00 M 0.00 0.02 M 0.02 0.47 M 0.22 M 0.15 M Q1 10.04 M 0.00 M 0.00 0.00 M 0.00 0.00 M 0.00 0.00 M 0.00 0.00 M 0.00 0.46 M 0.05 M 0.05 0.02 M 0.02 0.18 M Q2 16.60 M -4.69 M 10.05 M 0.00 M 0.00 0.00 M 0.00 0.00 M 0.00 0.00 M 0.00 0.00 M 0.00 0.00 M 0.00 0.03 M 0.03 Q3 0.00 M 0.00 0.00 M 0.00 0.00 M 0.00 0.00 M 0.00 0.30 M 11.07 M 2.82 M 1.48 M 1.70 M 1.70 1.55 M Q4 Accounts paid on time within each quarter, 2019-20

Measure Financial Q1 Q2 Q3 Q4 year 2019-20

Suppliers

Number of accounts due 8,435 2,537 1,888 1,691 2,319 for payment

Number of accounts paid on time 8,387 2,529 1,874 1,673 2,311

Target % accounts paid on time 90.00% 90.00% 90.00% 90.00% 90.00%

Actual % accounts paid on time 99.43% 99.68% 99.26% 98.94% 99.66%

$ amount of accounts due 3,457.74 M 1,027.18 M 819.32 M 702.90 M 908.34 M for payment

$ amount of accounts paid on time 3,341.72 M 1,026.59 M 815.68 M 603.68 M 895.78 M

Actual % accounts paid on time 96.64% 99.94% 99.56% 85.88% 98.62% (based on $)

Number of payments for interest – – – – –

Interest paid on overdue accounts – – – – –

Small business suppliers

Number of accounts due 641 209 130 122 180 for payment

Number of accounts paid on time 638 207 129 122 180

Actual % accounts paid on time 99.53% 99.04% 99.23% 100.00% 100.00%

$ amount of accounts due 13.14 M 4.49 M 2.71 M 2.05 M 3.89 M for payment

$ amount of accounts paid on time 13.11 M 4.50 M 2.67 M 2.05 M 3.89 M

Actual % accounts paid on time 99.78% 100.33% 98.38% 100.00% 100.00% (based on $)

Number of payments for interest – – – – –

Interest paid on overdue accounts – – – – –

The total external costs incurred in the production of this report are $1402.50.

Reporting and disclosure • 64 Funds granted to non-government community organisations No funds were granted to non-government community organisations in 2019-20.

Economic or other factors Annual Report 19–20 Annual Report Following approval of the Final Business Cases for Sydney Metro West and Sydney Metro – Western Sydney Airport, Sydney Metro has a significant pipeline of capital works to deliver to achieve our operational objectives.

The impact of the COVID-19 pandemic on the Australian construction industry is a critical economic factor impacting Sydney Metro. The NSW Government is committed to infrastructure projects like Sydney Metro as a key focus for economic recovery from COVID-19. Sydney Metro is working in conjunction with the NSW Government, NSW Treasury and our delivery partners to ensure the impacts and risks within our supply chain are closely monitored and appropriately mitigated. Construction productivity, offshore material supply, labour and workforce input risks are all being closely monitored. 65 Implementation of price determination Sydney Metro’s fare and pricing regimes and matters, as associated with the Independent Pricing and Regulatory Tribunal (IPART), are reserved for implementation and policy via Transport for NSW.

IPART is responsible for determining maximum fares for trips made across all Opal Services excluding Gold Opal, Child Opal, Concession Opal and travel on the School Student Travel Scheme. Sydney Metro commenced revenue service on 27 May 2019, and adopted the July 2018-19 Changes to Opal fares as per the IPART compliance statement.

Investment performance Not applicable to Sydney Metro.

Liability management performance Not applicable to Sydney Metro. Sydney Metro Sydney

Right: Bella Vista Station. Reporting and disclosure • 66 67 Sydney Metro Annual Report 19–20 Appendix A – Financial Statements Appendices • 68

INDEPENDENT AUDITOR’S REPORT Sydney Metro

To Members of the Parliament Opinion I have audited the accompanying financial statements of Sydney Metro, which comprises the Statement of comprehensive income for the year ended 30 June 2020, the Statement of financial position as at 30 June 2020, the Statement of changes in equity and the Statement of cash flows for the year then ended, notes comprising a Summary of significant accounting policies and other explanatory information.

In my opinion, the financial statements:

• give a true and fair view of the financial position of Sydney Metro as at 30 June 2020, and of its financial performance and its cash flows for the year then ended in accordance with Australian Accounting Standards • are in accordance with section 41B of the Public Finance and Audit Act 1983 (PF&A Act) and the Public Finance and Audit Regulation 2015

My opinion should be read in conjunction with the rest of this report. Basis for Opinion I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under the standards are described in the ‘Auditor’s Responsibilities for the Audit of the Financial Statements’ section of my report.

I am independent of Sydney Metro in accordance with the requirements of the:

• Australian Auditing Standards • Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for Professional Accountants (including Independence Standards)’ (APES 110).

I have fulfilled my other ethical responsibilities in accordance with APES 110.

Parliament promotes independence by ensuring the Auditor-General and the Audit Office of New South Wales are not compromised in their roles by:

• providing that only Parliament, and not the executive government, can remove an Auditor-General • mandating the Auditor-General as auditor of public sector agencies • precluding the Auditor-General from providing non-audit services.

I believe the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Other Information Sydney Metro’s annual report for the year ended 30 June 2020 includes other information in addition to the financial statements and my Independent Auditor’s Report thereon. The members of the Board of Sydney Metro are responsible for the other information. At the date of this Independent Auditor’s Report, the other information I have received comprise the Statement by the Board.

My opinion on the financial statements does not cover the other information. Accordingly, I do not express any form of assurance conclusion on the other information.

In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work I have performed, I conclude there is a material misstatement of the other information, I must report that fact.

I have nothing to report in this regard. The Board’s Responsibilities for the Financial Statements The members of the Board are responsible for the preparation and fair presentation of the financial statements in accordance with Australian Accounting Standards and the PF&A Act, and for such internal control as the members of the Board determine is necessary to enable the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the members of the Board are responsible for assessing Sydney Metro’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting. Auditor’s Responsibilities for the Audit of the Financial Statements My objectives are to:

• obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error • issue an Independent Auditor’s Report including my opinion.

Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in accordance with Australian Auditing Standards will always detect material misstatements. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions users take based on the financial statements.

A description of my responsibilities for the audit of the financial statements is located at the Auditing and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar4.pdf. The description forms part of my auditor’s report.

The scope of my audit does not include, nor provide assurance:

• that Sydney Metro carried out its activities effectively, efficiently and economically • about the assumptions used in formulating the budget figures disclosed in the financial statements • about the security and controls over the electronic publication of the audited financial statements on any website where they may be presented • about any other information which may have been hyperlinked to/from the financial statements.

Somaiya Ahmed Director, Financial Audit

Delegate of the Auditor-General for New South Wales

28 September 2020 SYDNEY

Table of contents

Statement by the Board ...... 3 StatementTable of comprehensive of contents income ...... 4 Statement of financial position ...... 5

Statement of changes in equity ...... 6 Statement by the Board ...... 3 Statement of cash flows ...... 7 Statement of comprehensive income ...... 4 1. Summary of significant accounting policies ...... 8 Statement of financial position ...... 5 2. Expenses excluding losses ...... 17 Statement of changes in equity ...... 6 3. Revenue ...... 21 Statement of cash flows ...... 7 4. Gain/(loss) on disposal ...... 25 1. Summary of significant accounting policies ...... 8 5. Other gains/(losses) ...... 25 2. Expenses excluding losses ...... 17 6. Program group ...... 25 3. Revenue ...... 21 7. Cash and cash equivalents ...... 26 4. Gain/(loss) on disposal ...... 25 8. Receivables ...... 26 5. Other gains/(losses) ...... 25 9. Contract Liabilities ...... 28 6. Program group ...... 25 10. Financial assets at fair value ...... 28 7. Cash and cash equivalents ...... 26 11. Other financial assets ...... 31 8. Receivables ...... 26 12. Non-current assets held for sale ...... 31 9. Contract Liabilities ...... 28 13. Property, plant and equipment ...... 32 10. Financial assets at fair value ...... 28 14. Leases ...... 42 11. Other financial assets ...... 31 15. Other assets ...... 49 12. Non-current assets held for sale ...... 31 16. Fair value measurement of non-financial assets ...... 49 13. Property, plant and equipment ...... 32 17. Payables ...... 53 14. Leases ...... 42 18. Borrowings ...... 53 15. Other assets ...... 49 19. Provisions ...... 54 16. Fair value measurement of non-financial assets ...... 49 20. Other liabilities ...... 55 17. Payables ...... 53 21. Reconciliation of net cash flows from operating activities to net result ...... 56 18. Borrowings ...... 53 22. Non-cash financing and investing activities ...... 56 19. Provisions ...... 54 23. Commitments for expenditure ...... 56 20. Other liabilities ...... 55 24. Equity and reserves ...... 57 21. Reconciliation of net cash flows from operating activities to net result ...... 56 25. Contingent assets and contingent liabilities ...... 58 22. Non-cash financing and investing activities ...... 56 26. Financial instruments ...... 58 23. Commitments for expenditure ...... 56 27. Administrative restructure ...... 68 24. Equity and reserves ...... 57 28. Budget review ...... 69 25. Contingent assets and contingent liabilities ...... 58 29. Related party disclosures ...... 70 26. Financial instruments ...... 58 30. Trust funds ...... 70 27. Administrative restructure ...... 68 31. Correction of prior year balances ...... 71 28. Budget review ...... 69 33. After balance date events ...... 73 29. Related party disclosures ...... 70

30. Trust funds ...... 70 2 31. Correction of prior year balances ...... 71 33. After balance date events ...... 73

2 Sydney Metro Statement by the Board for the year ended 30 June 2020

atement by the Secretary Pursuant to sections 41C (1B) and (1C) of the Public Finance and Audit Act 1983 (‘the Act’), on behalf of the Board we state that: Sydney Metro Statement by the Board (a) The accompanying financial statements have been prepared in accordance with: for the year ended 30 June 2020 - Applicable Australian Accounting Standards (which include Australian Accounting Interpretations);

- StatementThe requirements by the Board of the Public Finance and Audit Act 1983 and the Public Finance and Audit Regulation 2015; and Pursuant to sections 41C (1B) and (1C) of the Public Finance and Audit Act 1983 (‘the Act’), on behalf of the Board we state - that:The Treasurer’s Directions issued under section 9(2)(n) of the Act;

(b) The statements(a) The exhibitaccompanying a true andfinancial fair viewstatements of the havefinancial been positionpreparedof in Sydneyaccordance Metro with: as at 30 June 2020, and of its financial performance- Applicablefor theAustralian year then Accou endednting; Standards and (which include Australian Accounting Interpretations); (c) There are no- knownThe circumstances,requirements of the which Public would Finance render and anyAudit particulars Act 1983 and included the Public in the Finance financial and Auditstatements Regulation to be 2015 ; misleading or inaccurate.and - The Treasurer’s Directions issued under section 9(2)(n) of the Act; (b) The statements exhibit a true and fair view of the financial position of Sydney Metro as at 30 June 2020, and of its financial performance for the year then ended; and (c) There are no known circumstances, which would render any particulars included in the financial statements to be misleading or inaccurate.

John Arthur Gail Pemberton Chairman Director

Date: 24 September 2020 Date: 24 September 2020 John Arthur Gail Pemberton Chairman Director

Date: 24 September 2020 Date: 24 September 2020

3 Sydney Metro Sydney Metro Statement of comprehensive income Statement of comprehensive income for the year ended 30 June 2020 for the year ended 30 June 2020 Statement of comprehensive income Statement of comprehensive income Budget Actual Restated Budget Actual Restated 2020 2020 2019 2020 2020 2019 Notes $'000 $'000 $'000 Notes $'000 $'000 $'000

Expenses excluding losses Expenses excluding losses Operating expenses Operating expenses Personnel service expenses 2(a) 3,849 14,126 8,952 PersonnelOther operating service expenses expenses 2(a)2(b) 447,8913,849 14,12676,663 70,7258,952 Other operating expenses 2(b) 447,891 76,663 70,725 Major rail project expense 2(c) - 235,908 205,097 Depreciation Major rail project and amortisation expense 2(c)2(d) 161,323- 235,908218,798 205,09739,314 Depreciation and amortisation 2(d) 161,323 218,798 39,314 Grants and subsidies 2(g) - 11,759 332,206 GrantsFinance and costs subsidies 2(g)2(e) 126,587- 122,37211,759 332,20622,038 FinanceOther expenses costs 2(e)2(f) 126,587130,075 122,37278,966 22,03859,199 Other expenses 2(f) 130,075 78,966 59,199 Total expenses excluding losses 869,725 758,592 737,531 Total expenses excluding losses 869,725 758,592 737,531 Revenue RevenueSale of goods and services 3(a) - - 38,817 Sale of goodsgoods andand servicesservices from contracts with customers 3(a) 557,824- 22,048- 38,817- Sale of goods and services from contracts with customers 3(a) 557,824 22,048 - Investment revenue 3(b) - 37,451 38,366 InvestmentGrants and revenuecontributions 3(b)3(c) 1,693,797- 2,646,89937,451 2,690,58038,366 Grants and contributions 3(c) 1,693,797 2,646,899 2,690,580 Major rail project revenue 3(d) - 235,908 205,097 MajorResources rail project received revenue free of charge 3(d)3(e) -- 235,9082,284 205,0971,844 Resources received free of charge 3(e) - 2,284 1,844 Other revenue 3(f) - - 3,820 Other revenue 3(f) - - 3,820 Total revenue 2,251,621 2,944,590 2,978,524 Total revenue 2,251,621 2,944,590 2,978,524 Gain/(loss) on disposal 4 20,488 (37,347) (258,277) Gain/(loss) on disposal 4 20,488 (37,347) (258,277) Other gains/(losses) 5 - 62,493 3,895 Other gains/(losses) 5 - 62,493 3,895 Net result 1,402,384 2,211,144 1,986,611 Net result 1,402,384 2,211,144 1,986,611 Other comprehensive income

OtherItems thatcomprehensive may be reclassified income subsequently to net result Items that may be reclassified subsequently to net result

Net gains/(losses) in commodity swaps and foreign exchange - (7,379) 18,442 NetItems gains/(losses) that will not bein commodityreclassified swaps to net resultand foreign exchange - (7,379) 18,442 Items that will not be reclassified to net result Net increase/(decrease) in asset revaluation surplus 13 - 205,456 644,684 Net increase/(decrease) in asset revaluation surplus 13 - 205,456 644,684 Total other comprehensive income - 198,077 663,126 Total other comprehensive income - 198,077 663,126 Total comprehensive income 1,402,384 2,409,221 2,649,737 Total comprehensive income 1,402,384 2,409,221 2,649,737

The accompanying Notes form part of these financial statements. The accompanying Notes form part of these financial statements.

Refer Note 31 for details regarding restated prior year balances. Refer Note 31 for details regarding restated prior year balances.

4 4 Sydney Metro Sydney Metro Sydney Metro Statement of comprehensive income Statement of financial position Statement of financial position for the year ended 30 June 2020 as at 30 June 2020 as at 30 June 2020 Statement of comprehensive income Statement of financial position Statement of financial position Budget Actual Restated Budget Actual Restated Budget Actual Restated 2020 2020 2019 2020 2020 2019 2020 2020 2019 Notes $'000 $'000 $'000 Notes $'000 $'000 $'000 Notes $'000 $'000 $'000

Expenses excluding losses ASSETS Operating expenses ASSETS Current assets Personnel service expenses 2(a) 3,849 14,126 8,952 CashCurrent and assets cash equivalents 7 73,569 285,448 190,807 Other operating expenses 2(b) 447,891 76,663 70,725 ReceivablesCash and cash equivalents 87 145,26573,569 127,461285,448 240,075190,807 Major rail project expense 2(c) - 235,908 205,097 FinancialReceivables assets at fair value 108 145,265- 127,461- 240,0751,970 Depreciation and amortisation 2(d) 161,323 218,798 39,314 NonFinancial-current assets assets at fairheld value for sale 1210 - 15,565- 15,5651,970 Grants and subsidies 2(g) - 11,759 332,206 OtherNon-current financial assets assets held for sale 1112 - 15,5653,963 15,565- Other financial assets 11 - 3,963 - Finance costs 2(e) 126,587 122,372 22,038 Total current assets 218,834 432,437 448,417 Other expenses 2(f) 130,075 78,966 59,199 Total current assets 218,834 432,437 448,417 Total expenses excluding losses 869,725 758,592 737,531 Non-current assets Revenue ReceivablesNon-current assets 8 - 1,128,259 730,202 Sale of goods and services 3(a) - - 38,817 FinancialReceivables assets at fair value 108 - 1,128,259- 730,20218,863 Financial assets at fair value 10 - - 18,863 Sale of goods and services from contracts with customers 3(a) 557,824 22,048 - Property plant and equipment Investment revenue 3(b) - 37,451 38,366 Property Land and plant buildings and equipment 13 22,748 528,412 544,517 Grants and contributions 3(c) 1,693,797 2,646,899 2,690,580 LandPlant and buildingsequipment 13 22,748- 665,528,412543 672,354544,517 Major rail project revenue 3(d) - 235,908 205,097 InfrastructurePlant and equipment systems 13 16,860,644- 15,204,974665,543 13,452,030672,354 Resources received free of charge 3(e) - 2,284 1,844 Property, Infrastructure plant andsystems equipment 13 16,883,39216,860,644 16,398,92915,204,974 14,668,90113,452,030 Other revenue 3(f) - - 3,820 RightProperty, of use plant asset and equipment 1413 16,883,392- 16,398,92925,322 14,668,901- Total revenue 2,251,621 2,944,590 2,978,524 OtherRight ofassets use asset 1514 - 157,65825,322 - Gain/(loss) on disposal 4 20,488 (37,347) (258,277) TotalOther nonassets-current assets 15 16,883,392- 17,710,168157,658 15,417,966-

Other gains/(losses) 5 - 62,493 3,895 Total assetsnon-current assets 17,102,22616,883,392 18,142,60517,710,168 15,866,38315,417,966 Net result 1,402,384 2,211,144 1,986,611 Total assets 17,102,226 18,142,605 15,866,383

Other comprehensive income LIABILITIES Items that may be reclassified subsequently to net result LIABILITIES Current liabilities PayablesCurrent liabilities 17 337,099 255,591 412,179 Net gains/(losses) in commodity swaps and foreign exchange - (7,379) 18,442 BorrowingsPayables 1817 337,0999,073 809,904255,591 412,17977,288 Items that will not be reclassified to net result ProvisionsBorrowings 1918 9,073- 809,90433,770 77,288350 Net increase/(decrease) in asset revaluation surplus 13 - 205,456 644,684 OtherProvisions liabilities 2019 - 33,7707,180 350- Total other comprehensive income - 198,077 663,126 ContractOther liabilities liabilities 209 - 7,18093 - Total comprehensive income 1,402,384 2,409,221 2,649,737 TotalContract current liabilities liabilities 9 346,172- 1,106,53893 489,817- Total current liabilities 346,172 1,106,538 489,817

The accompanying Notes form part of these financial statements. Non-current liabilities BorrowingsNon-current liabilities 18 1,693,180 932,550 1,756,342 Borrowings 18 1,693,180 932,550 1,756,342 Refer Note 31 for details regarding restated prior year balances. Provisions 19 - 20,033 15,795 Provisions 19 - 20,033 15,795 Contract liabilities 9 - 20,000 - OtherContract liabilities liabilities 209 74,690- 20,0002,866 625- Other liabilities 20 74,690 2,866 625 Total non-current liabilities 1,767,870 975,449 1,772,762 Total nonliabilities-current liabilities 2,114,0421,767,870 2,081,987975,449 2,262,5791,772,762

NetTotal assets liabilities 14,988,1842,114,042 16,060,6182,081,987 13,603,8042,262,579 Net assets 14,988,184 16,060,618 13,603,804

EQUITY EQUITY Accumulated funds 14,988,184 15,200,266 12,940,678 Accumulated funds 14,988,184 15,200,266 12,940,678 Reserves - 860,352 663,126 TotalReserves equity 14,988,184- 16,060,618860,352 13,603,804663,126

Total equity 14,988,184 16,060,618 13,603,804 The accompanying Notes form part of these financial statements. The accompanying Notes form part of these financial statements.

Refer to Note 31 for details regarding restated prior year balances. Refer to Note 31 for details regarding restated prior year balances.

4 5 5 Sydney Metro Sydney Metro Statement of changes in equity Statement of changes in equity for the year ended 30 June 2020 for the year ended 30 June 2020

Asset Accumulated revaluationAsset Hedge Total Accumulatedfunds revaluationsurplus reserveHedge equityTotal funds surplus reserve equity Notes $ '000 $ '000 $ '000 $ '000 Notes $ '000 $ '000 $ '000 $ '000 Balance at 1 July 2019 12,933,265 644,684 18,442 13,596,391 Balance at 1 July 2019 12,933,265 644,684 18,442 13,596,391 Correction of errors 7,413 - - 7,413 Correction of errors 7,413 - - 7,413 Restated balance at 1 July 2019 12,940,678 644,684 18,442 13,603,804 Restated balance at 1 July 2019 12,940,678 644,684 18,442 13,603,804 Net result for the year 2,211,144 - - 2,211,144 Net result for the year 2,211,144 - - 2,211,144 Other comprehensive income Other comprehensive income Net gains/(losses)in foreign exchange - - (7,379) (7,379) Net gains/(losses)in foreign exchange - - (7,379) (7,379) Net increase/(decrease) in asset revaluation Net increase/(decrease) in asset revaluation surplus - 205,456 - 205,456 surplus - 205,456 - 205,456 Total other comprehensive income - 205,456 (7,379) 198,077 Total other comprehensive income - 205,456 (7,379) 198,077 Total comprehensive income for the year 2,211,144 205,456 (7,379) 2,409,221 Total comprehensive income for the year 2,211,144 205,456 (7,379) 2,409,221 Transactions with owners in their capacity Transactions with owners in their capacity as owners as owners Transfers to/from reserves to accumulated Transfers to/from reserves to accumulated funds 851 (851) - - funds 851 (851) - - Equity transfers 24 47,593 - - 47,593 Equity transfers 24 47,593 - - 47,593 Balance at 30 June 2020 15,200,266 849,289 11,063 16,060,618 Balance at 30 June 2020 15,200,266 849,289 11,063 16,060,618 Balance at 1 July 2018 - - - - Balance at 1 July 2018 - - - - Restated net result for the year 1,986,611 - - 1,986,611 Restated net result for the year 1,986,611 - - 1,986,611 Other comprehensive income Other comprehensive income Net gains/(losses) in foreign exchange - - 18,442 18,442 Net gains/(losses) in foreign exchange - - 18,442 18,442 Net increase/(decrease) in asset revaluation Netsurplus increase/(decrease) in asset revaluation - 644,684 - 644,684 surplus - 644,684 - 644,684 Total other comprehensive income - 644,684 18,442 663,126 Total other comprehensive income - 644,684 18,442 663,126 Restated total comprehensive income for Restatedthe year total comprehensive income for 1,986,611 644,684 18,442 2,649,737 the year 1,986,611 644,684 18,442 2,649,737 Transactions with owners in their Transactionscapacity as owners with owners in their capacity as owners Restated equity transfers 24 4,626,482 - - 4,626,482 Restated equity transfers 24 4,626,482 - - 4,626,482 Increase/(decrease) in net assets from Increase/(decrease) in net assets from administrative restructure 27 6,327,585 - - 6,327,585 administrative restructure 27 6,327,585 - - 6,327,585 Restated balance at 30 June 2019 12,940,678 644,684 18,442 13,603,804 Restated balance at 30 June 2019 12,940,678 644,684 18,442 13,603,804 Ste Ste The accompanying Notes form part of these financial statements. The accompanying Notes form part of these financial statements.

Refer Note 31 for details regarding restated prior year balances. Refer Note 31 for details regarding restated prior year balances. Statement of changes in equity State ment of changes in equity

6 6 Sydney Metro Sydney Metro Statement of cash flows Statement of cash flows for the year ended 30 June 2020 for the year ended 30 June 2020 Statement of cash flows Statement of cash flows Budget Actual Actual Budget Actual Actual 2020 2020 2019 2020 2020 2019 Notes $'000 $'000 $'000

Notes $'000 $'000 $'000

Cash flows from operating activities Cash flows from operating activities Payments Payments Personnel services (3,849) (11,807) (9,276) Personnel services (3,849) (11,807) (9,276) Finance costs (126,587) (122,372) (10,265) Finance costs (126,587) (122,372) (10,265) Service contract payments - (78,966) (59,199) Service contract payments - (78,966) (59,199) Payments to suppliers - (387,300) (351,255) Payments to suppliers - (387,300) (351,255) Other (577,966) (291,708) (259,152) Other (577,966) (291,708) (259,152) Total payments (708,402) (892,153) (689,147) Total payments (708,402) (892,153) (689,147)

Receipts Receipts Sale of goods and services 507,947 332,582 306,304 Sale of goods and services 507,947 332,582 306,304 Interest received - 5,779 4,299 Interest received - 5,779 4,299 Grants and contributions 1,693,797 2,666,098 2,690,580 Grants and contributions 1,693,797 2,666,098 2,690,580 Other 49,877 313,080 243,218 Other 49,877 313,080 243,218 Total receipts 2,251,621 3,317,539 3,244,401 Total receipts 2,251,621 3,317,539 3,244,401

Net cash flows from operating activities 21 1,543,219 2,425,386 2,555,254 Net cash flows from operating activities 21 1,543,219 2,425,386 2,555,254

Cash flows from investing activities Cash flows from investing activities Proceeds from sale of property, plant and equipment 20,488 68,776 20,988 Proceeds from sale of property, plant and equipment 20,488 68,776 20,988 Purchases of property, plant and equipment and intangible assets (1,495,915) (2,351,623) (2,381,574) ProceedsPurchases from of property, sale of financial plant and assets equipment and intangible assets (1,495,915)- (2,351,623) 17,431 (2,381,574)- Proceeds from sale of financial assets - 17,431 - Other - 5,483 - Other - 5,483 - Net cash flows from investing activities (1,475,427) (2,259,933) (2,360,586) Net cash flows from investing activities (1,475,427) (2,259,933) (2,360,586)

Cash flows from financing activities Cash flows from financing activities Repayment of borrowings and advances (79,224) (64,063) (3,861) PaymentRepayment of principalof borrowings portion and of leaseadvances liabilities (79,224)- (64,063) (6,749) (3,861)- Payment of principal portion of lease liabilities - (6,749) - Net cash flows from financing activities (79,224) (70,812) (3,861)

Net cash flows from financing activities (79,224) (70,812) (3,861 )

Net increase/(decrease) in cash (11,431) 94,641 190,807 Net increase/(decrease) in cash (11,431) 94,641 190,807 Opening cash and cash equivalents 85,000 190,807 - Opening cash and cash equivalents 85,000 190,807 - Closing cash and cash equivalents 7 73,569 285,448 190,807 Closing cash and cash equivalents 7 73,569 285,448 190,807

The accompanying Notes form part of these financial statements. The accompanying Notes form part of these financial statements.

7 7 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

1. Summary of significant accounting policies

(a) Sydney Metro - Reporting entity Sydney Metro is a statutory corporation established on 1 July 2018 under the Transport Administration Act 1988. Sydney Metro is a statutory authority for the purposes of the Public Finance and Audit Act 1983.

Sydney Metro is a not-for-profit entity for accounting purposes (as profit is not its principal objective) and it has no cash generating units. The principal objectives of Sydney Metro are to: a) deliver safe and reliable metro passenger services in an efficient, effective and financially responsible manner; and b) facilitate and carry out the orderly and efficient development of land in the locality of metro stations, depots and stabling yards, and proposed metro stations, depots and stabling yards. Sydney Metro is a controlled entity of Transport for NSW. Transport for NSW is a controlled entity of the Department of Transport which is consolidated as part of the NSW Total State Sector (ultimate parent). The financial statements of Sydney Metro (the Entity) for the year ended 30 June 2020 were authorised for issue by the Board on the date the accompanying Statement was signed.

(b) Basis of preparation The financial statements are general purpose financial statements which have been prepared on an accrual basis and in accordance with: • applicable Australian Accounting Standards (which include Australian Accounting Interpretations); • the requirements of the Public Finance and Audit Act 1983 (the Act) and the Public Finance and Audit Regulation 2015; and • NSW Treasurer’s Directions issued under the Act.

Property, plant and equipment, investment property, assets (or disposal groups) held for sale and certain financial assets and liabilities are measured at fair value. Other financial statement items are prepared in accordance with the historical cost convention except where specified otherwise.

All amounts are rounded to the nearest one thousand dollars and are expressed in Australian currency, which is the Entity’s presentation and functional currency.

(c) Critical accounting estimates, judgement and assumptions In the application of Australian Accounting Standards and the Directions issued by the NSW Treasurer, management is required to make judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various factors that are believed to be reasonable under the current set of circumstances. Actual results may differ from these estimates. Management evaluates these judgements, estimates and assumptions on an ongoing basis. Revisions to estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgements, key assumptions and estimates management have made are disclosed in the relevant notes to the financial statements.

(d) Statement of compliance The financial statements and notes comply with Australian Accounting Standards, which include Australian Accounting Interpretations.

8 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

1. Summary of significant accounting policies (continued)

(e) Accounting for the Goods and Services Tax (GST) Income, expenses and assets are recognised net of the amount of GST, except where: • the amount of GST incurred by the Entity as a purchaser that is not recoverable from the Australian Taxation Office is recognised as part of an asset’s cost of acquisition or as part of an item of expense; and • receivables and payables are stated with the amount of GST included. Cash flows are included in the Statement of Cash Flows on a gross basis. However, the GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the Australian Taxation Office are classified as operating cash flows.

(f) Foreign currency translation Transactions in foreign currencies are recorded using the spot rate at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the end of the reporting date. Differences arising on settlement or translation of monetary items are recognised in the net result. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non- monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income or net results are also recognised in other comprehensive income or net results, respectively).

(g) Comparative information Except when an Australian Accounting Standard permits or requires otherwise, comparative information is presented in respect of the previous period for all amounts reported in the financial statements.

Comparatives have been adjusted to reflect prior period adjustments. Refer Note 31.

(h) Changes in accounting policy, including new or revised Australian Accounting Standards

(i) Effective for the first time in FY2019-20 The entity applied AASB 15 Revenue from Contracts with Customers, AASB 1058 Income of Not-for-Profit Entities, and AASB 16 Leases for the first time. The nature and effect of the changes as a result of adoption of these new accounting standards are described below.

Several other amendments and interpretations apply for the first time in FY2019-20, but do not have an impact on the financial statements of the Entity.

AASB 15 Revenue from Contracts with Customers

AASB 15 Revenue from Contracts with Customers (AASB 15) supersedes AASB 111 Construction Contracts, AASB 118 Revenue and related interpretations and it applies, with limited exceptions, to all revenue arising from contracts with customers. AASB 15 establishes a five-step model to account for revenue arising from contracts with customers. Revenue is recognised when control of goods or services is transferred to the customer at amounts that reflect the consideration to which the Entity expects to be entitled in exchange for transferring the goods or services to the customer.

AASB 15 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires relevant disclosures.

9 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

1. Summary of significant accounting policies (continued)

(h) Changes in accounting policy, including new or revised Australian Accounting Standards (continued)

(i) Effective for the first time in FY2019-20 (continued)

AASB 15 Revenue from Contracts with Customers (continued)

In accordance with the transition provisions in AASB 15, the Entity has adopted AASB 15 retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application, i.e. 1 July 2019. The entity has applied all the transitional practical expedients permitted as mandated by NSW Treasury when:

• determining the transaction price • identifying the satisfied and unsatisfied performance obligations • allocating the transaction price to the satisfied and unsatisfied performance obligations

The impact of applying the above practical expedients is not expected to significantly affect the financial statements.

The effect of adopting AASB 15 is as follows:

Impact on Statement of Comprehensive Income:

30 June 2020 30 June 2020 30 June 2020 $'000 $’000 $’000 Adoption of Without adoption of Impact of AASB 15 AASB 15 AASB 15 Revenue Sale of goods and services from contracts with customers 22,849 73,545 (50,696)

Expense Other expenses 78,966 109,569 (30,603)

Net result 2,200,372 2,220,465 (20,093)

Impact on Statement of Financial Position::

30 June 2020 30 June 2020 30 June 2020 $'000 $’000 $’000 Adoption of Without adoption of Impact of AASB 15 AASB 15 AASB 15 Liabilities Contract liabilities (20,093) - (20,093)

Total adjustment to equity Accumulated funds (20,093) - (20,093)

These adjustments mainly related to the recognition of passenger service revenue and fund received to make payments to external supplier, where sufficiently specific performance obligations have been identified. Revenue from passenger services is now not recognised by the Entity, instead is applied to offset the metro service expenses recognised by the Entity. Additionally, funds received relating to specific performance obligation that the Entity must perform are now recognised as revenue to the extend the obligations have been satisfied, with a corresponding balance sheet adjustment for any unspent receipts as contract liabilities.

10 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

1. Summary of significant accounting policies (continued)

(h) Changes in accounting policy, including new or revised Australian Accounting Standards (continued)

(i) Effective for the first time in FY2019-20 (continued)

AASB 1058 Income of Not-for-Profit Entities

AASB 1058 Income of Not-for-Profit Entities (AASB 1058) replaces most of the existing requirements in AASB 1004 Contributions (AASB 1004). The scope of AASB 1004 is now limited mainly to contributions by owners (including parliamentary appropriations that satisfy the definition of a contribution by owners), administrative arrangements and liabilities of government departments assumed by other entities.

AASB 1058 applies to income with a donation component, i.e. transactions where the consideration to acquire an asset is significantly less than fair value principally to enable a not-for-profit entity to further its objectives; and volunteer services. AASB 1058 adopts a residual approach, meaning that entities first apply other applicable Australian Accounting Standards (e.g. AASB 1004, AASB 15 and AASB 16) to a transaction before recognising income.

Not-for-profit entities need to determine whether a transaction is/contains a donation (accounted for under AASB 1058) or a contract with a customer (accounted for under AASB 15).

AASB 1058 requires recognition of receipt of an asset, after the recognition of any related amounts in accordance with other Australian Accounting Standards, as income:

• when the obligations under the transfer is satisfied, for transfers to enable an entity to acquire or construct a recognisable non-financial asset that will be controlled by the Entity; and • immediately, for all other income within the scope of AASB 1058.

In accordance with the transition provisions in AASB 1058, the Entity has adopted AASB 1058 retrospectively with the cumulative effect of initially applying the standard at the date of initial application, i.e. 1 July 2019. The entity has adopted the practical expedient in AASB 1058 whereby existing assets acquired for consideration significantly less than fair value principally to enable the Entity to further its objectives, are not restated to their fair value.

The effect of adopting AASB 1058 was not material to the Entity.

11 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

1. Summary of significant accounting policies (continued)

(h) Changes in accounting policy, including new or revised Australian Accounting Standards (continued)

(i) Effective for the first time in FY2019-20 (continued)

AASB 16 Leases

AASB 16 Leases (AASB 16) supersedes AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases – Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognise most leases on the balance sheet.

Lessor accounting

Lessor accounting under AASB 16 is substantially unchanged from AASB 117. Lessors will continue to classify leases as either operating or finance leases using similar principles as in AASB 117. Therefore, AASB 16 does not have a significant impact for leases where the Entity is the lessor.

However, the Entity is required to treat sub-leases as either finance leases or operating leases for leases in which it is the intermediate lessor. The entity has reviewed the classification of sub-leases and identified that all sub-leases are back-to- back. Therefore, the Entity classifies these sub-leases as finance leases, resulting in the recognition of finance lease receivables as opposed to the right-of-use assets.

Lessee accounting

AASB 16 requires the Entity to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under AASB 117. As the lessee, the Entity recognises a lease liability and right-of-use asset at the inception of the lease. The lease liability is measured at the present value of the future lease payments, discounted using the interest rate implicit in the lease, or the lessee’s incremental borrowing rate if the interest rate implicit in the lease cannot be readily determined. The corresponding right-of-use asset is measured at the value of the lease liability adjusted for lease payments before inception, lease incentives, initial direct costs and estimates of costs for dismantling and removing the asset or restoring the site on which it is located.

The entity has adopted the partial retrospective option in AASB 16, where the cumulative effect of initially applying AASB 16 is recognised on 1 July 2019 and the comparatives for the year ended 30 June 2019 are not restated.

In relation to leases that had previously been classified as ‘operating leases’ under AASB 117, a lease liability is recognised at 1 July 2019 at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the date of initial application. The weighted average lessee’s incremental borrowing rates applied to the lease liabilities on 1 July 2019 were as follows:

Lease term Rate on 1 July 2019 For leases up to 5 years 1.42% For leases > 5 years up to 10 years 2.00% For leases > 10 years 2.42%

The corresponding right-of-use asset is initially recorded on transition at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the statement of financial position as at 30 June 2020. The exception is right-of-use assets that are subject to accelerated depreciation. These assets are measured at their fair value at 1 July 2019.

12 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

1. Summary of significant accounting policies (continued)

(h) Changes in accounting policy, including new or revised Australian Accounting Standards (continued)

(i) Effective for the first time in FY2019-20 (continued)

AASB 16 Leases (continued)

For leases previously classified as finance leases the Entity recognised the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right-of-use asset and the lease liability at the date of initial application. The measurement principles of AASB 16 are only applied after that date.

The entity elected to use the practical expedient to expense lease payments for lease contracts that, at their commencement date, have a lease term of 12 months or less and do not contain a purchase option (short-term leases), and lease contracts for which the underlying asset is valued at $10,000 or under when new (low-value assets).

In applying AASB 16 for the first time, the Entity has used the following practical expedients permitted by the standard: • not reassess whether a contract is, or contains, a lease at 1 July 2019, for those contracts previously assessed under AASB 117 and Interpretation 4; • applying a single discount rate to a portfolio of leases with reasonably similar characteristics; • relying on its previous assessment on whether leases are onerous immediately before the date of initial application as an alternative to performing an impairment review; • not recognise a lease liability and right-of-use-asset for short-term leases that end within 12 months of the date of initial application; • excluding the initial direct costs from the measurement of the right-of-use asset at the date of initial application; and using hindsight in determining the lease term where the contract contained options to extend or terminate the lease.

The effect of adoption AASB 16 as at 1 July 2019 is as follows:

$'000 Assets Receivable 1,626 Right of use asset 16,815 Total assets 18,441

Liabilities Borrowings 18,441 Total liabilities 18,441

Equity Accumulated funds - -

13 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

1. Summary of significant accounting policies (continued)

(h) Changes in accounting policy, including new or revised Australian Accounting Standards (continued)

(i) Effective for the first time in FY2019-20 (continued)

AASB 16 Leases (continued)

The lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as of 30 June 2019, as follows:

$'000

Operating lease commitments as at 30 June 2019 (GST included) 6,056 (Less): GST included in operating lease commitments (551) Operating lease commitments as at 30 June 2019 (GST excluded) 5,505 Weighted average incremental borrowing rate as at 1 July 2019 1.42% Discounted operating lease commitments as at 1 July 2019 5,428 Add: commitments relating to leases previously classified as finance leases (GST excluded) - (Less): commitments relating to short-term leases (754) (Less): commitments relating to leases of low-value assets (1) Add/(less): contracts re-assessed as lease contracts 8,631 Add: Lease payments relating to renewal periods not included in operating lease commitments as at 30 June 2019 5,185 Add/(less): adjustments relating to changes in the index or rate affecting variable payments (48) Lease liabilities as at 1 July 2019 18,441

In relation to leases that had previously been classified as ‘operating leases’ under AASB 117, a lease liability is recognised at 1 July 2019 at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the date of initial application. The weighted average incremental borrowing rate as at 1 July 2019 was 1.42% derived for leases within 1 to 5 years. The entity applied practical expedient in respect of lease less than 12 months and low value asset lease below $10,000. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

14 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

1. Summary of significant accounting policies (continued)

(h) Changes in accounting policy, including new or revised Australian Accounting Standards (continued)

(ii) Issued but not yet effective

NSW public sector entities are not permitted to early adopt new Australian Accounting Standards, unless Treasury determines otherwise.

AASB 1059 Service Concession Arrangements: Grantors AASB 1059 Service Concession Arrangements: Grantor (AASB 1059) is effective for financial reporting periods commencing on or after 1 January 2020. Therefore, AASB 1059 will be effective from 1 July 2020 for the Entity. At the same time, NSW Treasury Policy and Guideline Paper TPP 06-8: Accounting for Privately Financed Projects (TPP 06-8) will also be withdrawn.

AASB 1059 addresses the accounting for a service concession arrangement from a grantor’s perspective. Service concession arrangements (SCAs) are contracts between a grantor and an operator where an operator provides public services related to a service concession asset on behalf of a public sector grantor for a specified period of time and manages at least some of those services.

AASB 1059 requires the grantor to initially recognise a service concession asset, at current replacement cost, in a service concession arrangement where it controls the asset. A corresponding liability is also recognised depending on the nature of the consideration exchanged.

The Entity will adopt AASB 1059 retrospectively by recognising and measuring service concession assets and related liabilities, with any net adjustments to the amounts of assets and liabilities recognised in accumulated funds at the date of initial application of 1 July 2019.

Based on the preliminary assessment, the Entity estimates that the adoption of AASB 1059 will impact the transactions and balances recognised in its financial statements as follows: • At the date of initial application, additional liabilities of $658 million will be recognised, with a corresponding decrease in accumulated funds of $658 million. This includes the reclassification of $9.2 billion of existing property, plant and equipment as service concession assets;and • For the period ended 30 June 2020, net result and total comprehensive result are expected to increase by $443 million.

Based on the Entity’s assessment, the Public Private Partnership contracts with Northwest relating to Metro Northwest and City and Southwest fall in the scope of AASB 1059. The arrangements involve Northwest Rapid Transit (the operator) being responsible for the: • design and construction of the Metro infrastructure assets controlled by the Entity; and • operation and maintenance of the relevant Metro assets until May 2034 (service element).

In return the operator is compensated directly by the Entity.

The impact represents management’s current best estimate and is still under review. It is possible that the amount recognised in the statement of financial position as at the date of initial application and the statement of comprehensive income for the period ending 30 June 2020 will differ from this estimate, as a result of further review of underlying service concession arrangement data and contractual arrangements.

15 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

1. Summary of significant accounting policies (continued)

(h) Changes in accounting policy, including new or revised Australian Accounting Standards (continued)

(i) Issued but not yet effective

Other standards whose impact on initial application is not expected to be significant or material The impact of the following standards in the period of initial application are not expected be significant.

Applicable to annual reporting periods beginning Standard on or after AASB 2018-6 Amendments to Australian Accounting Standards – 1 January 2020 Definition of a Business AASB 2018-7 Amendments to Australian Accounting Standards – 1 January 2020 Definition of Material AASB 2019-1 Amendments to Australian Accounting Standards – 1 January 2020 References to the Conceptual Framework AASB 2019-2 Amendments to Australian Accounting Standards – 1 January 2020 Implementation of AASB 1059

AASB 2019-3 Amendments to Australian Accounting Standards - 1 January 2020 Interest Rate Benchmark Reform

AASB 2020-1 Amendments to Australian Accounting Standards – 1 January 2022 Classification of Liabilities as Current or Non-current

A number of other new standards or amendments to standards have been identified and assessed and it is expected that they will have no material impact on the financial statements of the Entity.

16 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

2. Expenses excluding losses

(a) Personnel service expenses 2020 2019 $'000 $'000

Salaries and wages (including annual leave) 9,209 5,561 Superannuation - defined benefit plans 83 38 Superannuation - defined contribution plans 947 577 Long service leave 2,298 1,511 Workers' compensation insurance 27 14 Payroll tax and fringe benefits tax 709 449 Redundancy payments 853 802 Personnel service expenses 14,126 8,952

In addition to the above, $nil (2019: $6.6 million) has been included in major rail project expenses and $66.0 million (2019: $47.4 million) has been capitalised in property, plant and equipment.

(b) Other operating expenses 2020 2019 $'000 $'000

Auditor's remuneration - audit of financial statements 277 215 Advertising and marketing 3,071 4,799 Telecommunications 14 324 Electricity, gas and water 14,359 2,532 Fleet hire and leasing charges including access fees 23 - General expenses 3,816 513 Information technology 108 124 Insurance 78 61 Legal services 1,108 534 Office expenses 78 508 Other contractors and consultants 47,236 55,968 Property rent and other related expenses1 3,495 3,373 Travel expenses 19 48 Shared service charges 2,981 1,726 Other operating expenses 76,663 70,725 1 Property rent and other related expenses in 2020 includes expenses relating to short term and low value leases. Refer Note 14 for details.

17 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

2. Expenses excluding losses (continued)

(c) Major rail project expenses 2020 2019 Note $'000 $'000

Personnel related expenses - 6,613 Skill hire contractors - 5,783 Other contractors 235,888 186,184 Property acquisition - 2,057 Legal services 20 2,046 Rent and other related expenses - 1,010 Information technology and telecommunication expenses - 325 Other - 1,079 Major rail project expenses 3(d) 235,908 205,097

Gross amount due from/(to) RailCorp and billing to date are as follows: Costs incurred (235,908) (205,097) Billings to date 235,908 205,097 Gross amount due from RailCorp - -

(d) Depreciation and amortisation expense

2020 2019 Notes $'000 $'000

Infrastructure systems Rail systems 192,451 33,978 Buildings Buildings 60 - Plant and equipment Rolling stock 18,655 3,257 Plant and equipment 7,516 2,079 Right of use 116 - Depreciation 13,14 218,798 39,314 Refer Notes 13 and 14 for recognition and measurement policies on depreciation and amortisation.

Reconciliation to Note 14 - Depreciation of right-of-use assets

Depreciation of operational and property assets 6,536 Right of use depreciation capitalised to infrastructure (6,420) 116

Depreciation of right-of-use assets is capitalised to infrastructure assets to the extent the leases are directly attributable costs of the infrastructure asset. In 2020, the Entity changed the remaining useful lives of rail infrastructure assets, refer Note 13 for details.

18 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

2. Expenses excluding losses (continued)

(e) Finance costs

2020 2019 $'000 $'000

Interest expense from financial liabilities not at fair value through profit and loss 121,765 22,006 Unwinding of discount on liabilities 383 32 Interest expense - lease liabilities 224 - Finance costs 122,372 22,038

(f) Other expenses 2020 2019 $'000 $'000

Bus replacement services 10,541 43,685 Metro service contract payments 68,425 15,514 Other expenses 78,966 59,199

As a result of applying AASB 15 Revenue from Contracts with Customers. Sydney Metro only contributes to the provision of passenger services and the private sector operator is considered the party that is providing passenger service for the purpose of recognising farebox revenue. Revenue from passenger services is now not recognised by the Entity from FY2019-20, instead it is applied to offset the metro service expenses. During FY2019-20, total farebox collected was $30.6 million.

(g) Grants and subsidies

Restated 2020 2019 $'000 $'000

Grants to external parties - transfer of assets 11,759 332,206 Grants and subsidies 11,759 332,206

Grants to external parties have been restated to be $10.0 million higher in 2019. Refer Note 31 for details regarding restated prior year balance.

Recognition and measurement

(i) Personnel services expenses

Personnel services are provided by the Transport Service of New South Wales. Personnel service expenses include salaries, wages, leave entitlements, superannuation, workers’ compensation insurance premium, payroll tax, fringe benefits tax and redundancies.Some personnel service expenses are included in the construction costs of property, plant and equipment assets and are, therefore, not included in personnel service expenses.

(ii) Other operating expenses

Other operating expenses generally represent the day-to-day running costs incurred in the normal operations of the Entity.

(iii) Insurance

The entity arranges insurance cover through the NSW Treasury Managed Fund Scheme, apart from Sydney Metro City and Southwest project cover, which is arranged through private insurance provider, and insurance for the Northwest operation is arranged separately and paid for by the private operator. The expense (premium) is determined by the fund manager based on past claims experience. 19 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

2. Expenses excluding losses (continued)

Recognition and measurement (continued)

(iv) Lease expenses

Operating leases (up to 30 June 2019)

Up to 30 June 2019, operating lease payments are recognised as an operating expense in the Statement of Comprehensive Income on a straight-line basis over the lease term. An operating lease is a lease other than a finance lease.

Lease expenses (from 1 July 2019)

From 1 July 2019, the Entity recognises the lease payments associated with the following types of leases as an expense on a straight-line basis:

• Leases that meet the definition of short-term i.e. where the lease term at commencement of the lease is 12 months or less. This excludes leases with a purchase option.

• Leases of assets that are valued at $10,000 or under when new.

Variable lease payments not included in the measurement of the lease liability (i.e. variable lease payments that do not depend on an index or a rate, initially measured using the index or rate as at the commencement date). These payments are recognised in the period in which the event or condition that triggers those payments occurs.

(v) Major rail project expenses

The entity manages the design and construction of certain major rail projects on behalf of RailCorp. RailCorp receives a direct equity injection from the Crown Entity to fund its contract activities with the Entity. Under this funding arrangement, RailCorp reimburses Sydney Metro for construction costs incurred. The arrangement is considered to be in the nature of construction contracts and is recognised in accordance with AASB 15 Revenue from Contracts with Customers. These expenses are recovered through major rail project revenue.

(vi) Maintenance

There is no maintenance cost included in personnel related expenses.

(vii) Finance costs

Finance costs comprise mainly interest charges and unwinding of discount of liabilities recorded at present value. In accordance with Treasury’s mandate for the not-for-profit general government sector agencies, finance costs are expensed and recognised in the Statement of Comprehensive Income in the period they are incurred.

(viii) Grants and subsidies

Grants and subsidies generally comprise contributions in cash or in kind to various local government authorities and other organisations. The contributions include transfers of assets for nil consideration. The grants and subsidies are expensed on the transfer of the cash or assets.

20 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

3. Revenue

(a) Sale of goods and services from contracts with customers / Sale of goods and services

Sale of goods and services from contracts with customers

2020 2019 $'000 $'000

Passenger service revenue - - Other 395 - Recoupment of project costs 21,653 - Total rendering of services 22,048 -

Sale of goods and services

2020 2019 $'000 $'000

Passenger service revenue - 3,486 Other - 2,118 Recoupment of project costs - 33,213 Total rendering of services - 38,817

As a result of applying AASB 15 Revenue from contracts with customers, revenue from passenger services is now not recognised by the Entity from FY2019-20, instead it is applied to offset the metro service expenses (note 2(f)). During FY2019-20, total farebox collected was $30.6 million.

(b) Investment revenue

2020 2019 $'000 $'000

Rental Income 1,064 915 Interest income 36,371 37,451 Finance income on net investment in lease 16 - Investment revenue 37,451 38,366

Interest income includes $35.2 million (2019: $35.3 million) unwinding of the discount of the present value of non-current receivables (refer to Note 8).

(c) Grants and contributions

2020 2019 $'000 $'000

Grants from Transport for NSW 2,646,899 2,690,580 Grants and contributions 2,646,899 2,690,580

21 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

3. Revenue (continued)

(c) Grants and contributions (continued)

The Entity receives its grant funding from Transport for NSW which receives appropriations from the Consolidated Fund. Grant funding for each financial year are set out in the Budget Paper for that year. Due to COVID-19, the State Budget and related 2020-21 Appropriation Bill has been delayed and is anticipated to be tabled in Parliament in November/December 2020. However, pursuant to section 4.10 of the Government Sector Finance Act 2018 (GSF Act), the Treasurer has authorised Ministers to spend specified amounts from Consolidated Fund. This authorisation is current from 1 July 2020 until the earlier of 31 December 2020 (or another day prescribed by the regulations) or enactment of the 2020-21 annual Appropriations Bill.

(d) Major rail project revenue

2020 2019 Note $'000 $'000

Major rail project revenue 2(c) 235,908 205,097 Major rail project revenue 235,908 205,097

(e) Resources received free of charge

Resources received free of charge represents acceptance by the Crown Entity of employee benefits and other liabilities.

2020 2019 $'000 $'000

Personnel services - long service leave 2,218 1,795 Personnel services - superannuation - defined benefit 64 47 Personnel services - payroll tax 2 2 Resources received free of charge 2,284 1,844

(f) Other revenue

Restated 2020 2019 $'000 $'000

Recognition of assets – asset transfers - 3,820 Other income - 3,820

Assets transferred and acquired by the Entity for nil or nominal considerations are recorded at fair value as at the transfer date. As such, they are recorded as revenue with a corresponding addition to property, plant and equipment (refer Note 13).

Other revenue has been restated to be $3.8 million higher in 2019. Refer Note 31 for details regarding restated prior year balance.

22 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

3. Revenue (continued)

Recognition and measurement

Until 30 June 2019, income is recognised in accordance with AASB 111 Construction Contracts, AASB 118 Revenue and AASB 1004 Contributions. From 1 July 2019, income is recognised in accordance with the requirements of AASB 15 Revenue from Contracts with Customers (AASB 15) or AASB 1058 Income of Non-for-Profit Entities (AASB 15), dependent on whether there is a contract with a customer defined by AASB 15.

Income is recognised and measured at the fair value of the consideration or contribution received or receivable to the extent that it is probable that the economic benefit will flow to the Entity and the income can be reliably measured. Comments regarding the accounting policies for the recognition of income are provided below.

(i) Sale of goods

Until 30 June 2019

Revenue from the sale of goods is recognised as revenue when the Entity transfers the significant risks and rewards of ownership of the assets.

(ii) Rendering of services

From 1 July 2019

Revenue from the sale of goods is recognised as revenue when the Entity satisfies a performance obligation by transferring the goods. The entity typically satisfies its performance obligations when it provides the specified good, i.e. when the control of the goods is transferred to the customer. The payments are typically due when performance obligations have been satisfied.

Revenue from these sales is recognised based on the price specified in the contract, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. No element of financing is deemed present as the sales are made with a short credit term. No volume discount or warranty is provided on the sale.

Until 30 June 2019

Revenue from the rendering of services (including passenger transport services) is recognised as revenue when the service is provided or by reference to the stage of completion based on hours incurred to date.

From 1 July 2019

Revenue from the provision of services is recognised when the Entity satisfies the performance obligation by transferring the promised services. These services include passenger transport services and recoupable project delivery services for other agencies. The entity typically satisfies its performance obligations when the promised service has been provided.

Recoupable project revenue is recognised over time as the services are provided, and the stage of completion for determining the amount of revenue to recognise is assessed based on the work performed and therefore entitles the Entity to raise an invoice. The related costs are recognised in profit or loss when they are incurred.

The revenue is measured at the transaction price agreed under the contract. No element of financing is deemed present as payments are due when service is provided.

23 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

3. Revenue (continued)

Recognition and measurement (continued)

(iii) Investment income

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For financial assets that become credit impaired, the effective interest rate is applied to the amortised cost of the financial asset (i.e. after deducting the loss allowance for expected credit losses).

Rental income is recognised in accordance with AASB 16 Leases on a straight-line basis over the lease term.

(iv) Grants and contributions

Until 30 June 2019

Income from grants (other than contribution by owners) is recognised when the Entity obtains control over the contribution. The entity is deemed to have assumed control when the grant is received or receivable. Contributions are recognised at their fair value.

From 1 July 2019

Income from grants to acquire/construct a recognisable non-financial asset to be controlled by the Entity is recognised when it satisfies its obligations under the transfer. The entity satisfies the performance obligations under the transfer to construct assets over time as the non-financial assets are being constructed. The cost incurred is used to recognise income, because this most closely reflects the progress to completion.

Revenue from grants with sufficiently specific performance obligations is recognised as when the Entity satisfies a performance obligation by transferring the promised goods or services. The entity typically satisfies its performance obligations when the corresponding costs are incurred. The payments are typically due the performance obligation is satisfied or in accordance with the funding agreement.

Revenue from these grants is recognised based on the grant amount specified in the funding agreement/funding approval, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. No element of financing is deemed present as funding payments are usually received in advance or shortly after the relevant obligation is satisfied.

From 1 July 2019 (continued)

Refer Note 9 for transaction price allocated to the performance obligations that have not been satisfied at the end of the year and when it is expected to be recognised as revenue.

Income from grants without sufficiently specific performance obligations is recognised when the Entity obtains control over the granted assets (e.g. cash).

(v) Major rail project revenue

Major rail project revenue is recognised in the Statement of Comprehensive Income in proportion to the stage of completion of these RailCorp funded construction activities at the reporting date. The value of work performed is measured at the value of the progressive costs incurred during the reporting period for each project. Major rail project expense is recognised in the Statement of Comprehensive Income as incurred. Amounts due from RailCorp for these rail projects are disclosed as an a contract asset, and the amounts due to RailCorp are disclosed as a contract liability. 24 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

4. Gain/(loss) on disposal

2020 2019 Note $'000 $'000

Proceeds from asset sale 427,077 602,591 Net carrying amount of property, plant and equipment disposed 13 (464,424) (860,868) Gain/(loss) on disposal (37,347) (258,277)

The Entity entered into Integrated Station Development agreements with external parties for the construction of metro stations and over-station development, with sale of associated rights that serve as a partial offset to overall metro station development costs. The transactions involve transfer and long-term lease from the Entity to the external parties that are treated as asset sales for accounting purposes. The majority of sales proceeds are expected to be received by the Entity in the future, and are recorded at present value and/or fair value as other receivables (refer Note 8), while the unwinding of discount on these receivables are recorded as interest income (refer Note 3(b)).

5. Other gains/(losses)

2020 2019 $'000 $'000

Impairment loss (5,950) - Derivative gains/(losses) 9,045 3,895 Refinancing gain/(losses) on borrowings 59,398 - Other gains/(losses) 62,493 3,895

Recognition and measurement

Derivative gains/(losses)

Refer to the recognition and measurement in Note 10 for derivatives financial instruments.

Impairment losses

Impairment losses may arise on assets held by the Entity from time to time. Accounting for impairment losses is dependent upon the individual asset (or group of assets) subject to impairment. Accounting policies and events giving rise to impairment losses are disclosed in Notes 13 and 14.

6. Program group

The entity has one program group namely: Metropolitan capacity enhancements Definition: This program group covers infrastructure and asset programs that enhance the capacity of the transport system to efficiently and sustainably cater for the future demand for travel. The scope of activities within this service group includes the delivery of urban infrastructure (or capacity enhancements to existing infrastructure) within metropolitan networks.

25 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

7. Cash and cash equivalents

2020 2019 $'000 $'000

Cash at bank and on hand 285,448 190,807 Cash and cash equivalents 285,448 190,807

For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash at bank and cash on hand.

Cash and cash equivalent assets recognised in the Statement of Financial Position are reconciled at the end of the financial year to the Statement of Cash Flows as follows:

2020 2019 $'000 $’000

Cash and cash equivalents (per Statement of financial position) 285,448 190,807 Cash and cash equivalents (per Statement of cash flows) 285,448 190,807

Refer Note 26 for details regarding credit risk, liquidity risk and market risk arising from financial instruments.

8. Receivables

2020 2019 $'000 $'000

Current receivables Trade receivables from contracts with customers 15,166 - Sale of goods and services - 2,946 Goods and Services Tax recoverable 23,942 40,837 Prepayments 27,553 29,490 Other receivables 59,988 165,684 Investment income receivable 2 1,118 Lease receivable 810 - Current receivables 127,461 240,075

Non-Current receivables Other receivables 1,128,259 708,202 Prepayments - 22,000 Non-Current Receivables 1,128,259 730,202

1 Other receivables include proceeds receivable from external parties under the Integrated Station Development arrangements of $1,078.3 million (2019: $613.9 million), and grant receivable from Infrastructure NSW (previously Urban Growth Development Corporation) of $99.6 million (2019: $94.3 million). These receivables are recorded at present value of future cash flows.

The Entity did not recognise Expected Credit Losses at 30 June 2020 (2019: Nil).

Details regarding credit risk, liquidity risk and market risk, including financial assets that are either past due or impaired, are disclosed in Note 26.

26 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

8. Receivables (continued)

Recognition and measurement

All ‘regular way’ purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

Receivables are initially recognised at fair value plus any directly attributable transaction costs. Trade receivables that do not contain a significant financing component are measured at the transaction price.

Subsequent measurement

Receivable held by the Entity with the objective to collect the contractual cash flows are measured at amortised cost using the effective interest method, less any impairment. Changes are recognised in the net result for the year when impaired, derecognised or through the amortisation process.

Receivable held by the Entity that are linked to the fair value of the underlying assets are measured at fair value through profit or loss. Accordingly, these receivables are re-measured at fair value at each reporting date until receipt, and the movement in fair value is recognised in the profit or loss.

The entity recognises an allowance for expected credit losses (ECLs) for all debt financial assets not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows and the cash flows that the Entity expects to receive, discounted at the original effective interest rate.

For trade receivables, the Entity applies a simplified approach in calculating ECLs. The entity recognises a loss allowance based on lifetime ECLs at each reporting date.

27 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

9. Contract Liabilities

1 July 2019 adjusted for 2020 AASB 15 $'000 $'000

Contract liabilities – current 93 - Current contract liabilities 93 -

Contract liabilities – non-current 20,000 - Non- Current contract liabilities 20,000 -

Total Contract liabilities 20,093 -

Recognition and measurement

Contract liabilities relate to funding received in advance from Infrastructure NSW in respect of the design and construction of affordable housing within the Waterloo Metro Quarter Development, and from the Department of Education under the Infrastructure Skills Legacy Program. The balance of contract liabilities at 30 June 2020 was impacted by the grant funding received but not yet spent.

2020 $'000 Revenue recognised that was included in the contract liability balance (adjusted for AASB 15) at the beginning of the year -

Revenue recognised from performance obligations satisfied in previous periods -

Transaction price allocated to the remaining performance obligations from contracts with customers 20,093

The transaction price allocated to the remaining performance obligation relates to grants and contributions. $20.1 million has been recognised as revenue in FY2019-20, and the remaining is expected to be recognised as revenue in FY2020-21 and FY2023-24.

10. Financial assets at fair value 2020 2019 $'000 $'000 Financial assets held for trading Foreign exchange derivatives - cash flow hedges - 1,970 Current financial assets at fair value - 1,970 Foreign exchange derivatives - cash flow hedges - 17,443 Energy derivative - cash flow hedges - 1,420 Non-current financial assets at fair value - 18,863

Recognition and measurement

All ‘regular way’ purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

28 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

10. Financial assets at fair value (continued)

Classification and measurement

The Entity’s financial assets are classified at fair value at initial recognition, and subsequently measured at either fair value through other comprehensive income or fair value through profit or loss.

Transaction costs of financial assets carried at fair value through profit or loss are expensed in net results. Transaction costs of financial assets measured at fair value through other comprehensive income are included as part of their fair value and amortised to net results using the effective interest method.

(i) Financial assets at fair value through other comprehensive income

The Entity measures financial assets at fair value through other comprehensive income when they are held for both collection of contractual cash flows and for selling the financial assets, and where the assets’ cash flows represent solely payments of principal and interest.

Movements in the carrying amount are taken through other comprehensive income, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in net results. When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to net results and recognised in other gains/(losses).

Interest income from these financial assets is included in investment revenue using the effective interest method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in the Statement of Comprehensive Income.

(ii) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value under AASB 9 Financial Instruments.

Financial assets are held for trading if acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments.

Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria to be classified at amortised cost or at fair value through other comprehensive income, financial assets may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch. A gain or loss on a financial asset that is subsequently measured at fair value through profit or loss is recognised in net results and presented net within other gains/(losses).

(iii) Derivative financial instruments and hedge accounting

The entity holds derivative financial instruments to hedge its foreign currency risk exposure arising from overseas purchase commitments and manage its exposure to wholesale energy prices arising from commitments to purchase renewable energy. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Embedded derivatives are separated from the host contract and accounted for separately if certain criteria are met.

29 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

10. Financial assets at fair value (continued)

Recognition and measurement (continued)

(iii) Derivative financial instruments and hedge accounting (continued)

Specific accounting treatment is required for derivatives designated as hedging instruments in cash flow hedge relationships. To qualify for hedge accounting, the hedging relationship must meet several strict conditions with respect to documentation, probability of occurrence of the hedged transaction and hedge effectiveness. All other derivative financial instruments are accounted for at fair value through profit or loss.

For the purpose of hedge accounting, hedges are classified as: • Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment; • Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment; and • Hedges of a net investment in a foreign operation.

A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements: • There is ‘an economic relationship’ between the hedged item and the hedging instrument; • The effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship; and • The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Entity actually hedges and the quantity of the hedging instrument that it actually uses to hedge that quantity of hedged item.

At the inception of a hedge relationship, the Entity formally designates and documents the hedge relationship, to which the Entity wishes to apply hedge accounting. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

The hedge documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Entity will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined).

Foreign exchange derivatives – cash flow hedges

The entity has designated its forward currency contracts as cash flow hedges. The effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income and included within the cash flow hedge reserve in equity, while any ineffective portion is recognised immediately in profit or loss.

At the time the hedged item affects profit or loss, any gain or loss previously recognised in other comprehensive income is transferred from equity to profit or loss and presented as a reclassification adjustment within other comprehensive income. However, if the hedged item is the cost of a non-financial asset or liability, the gains and losses previously recognised in other comprehensive income are included in the initial measurement of the hedged item.

If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting or hedge accounting is discontinued, any cumulative gain or loss previously recognised in other comprehensive income remains separately in equity until the forecast transaction occurs. However, if the forecast transaction is no longer expected to occur, the cumulative gain or loss in equity is transferred to profit or loss.

30 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

10. Financial assets at fair value (continued)

Recognition and measurement (continued)

(iii) Derivative financial instruments and hedge accounting (continued)

Energy derivative – cash flow hedge

The entity has entered into an energy derivative for economic hedging purposes under the approved risk management policies, which is not designated in a hedge relationship hedge under AASB 9 Financial Instruments. The derivative is categorised as held for trading and classified in the Statement of Financial Position as cash flow hedge. Changes in the fair value of derivative instruments that are not designated in a hedge relationship are recognised immediately in profit or loss as part of gain/(loss) in fair value of financial instruments.

11. Other financial assets

2020 2019 $'000 $'000

Energy Certificate - at cost 3,963 - Current other financial assets 3,963 -

Recognition and measurement

Large-scale generation certificates (LGC) used solely to satisfy the Entity’s retail sales commitments and surrender obligations are measured at cost.

12. Non-current assets held for sale

2020 2019 $'000 $'000

Non-Current assets held for sale Land and buildings held for sale 15,565 15,565 Non-current assets held for sale 15,565 15,565

Non-current assets held for sale are parcels of land around Metro Northwest stations being developed with Landcom where efforts to sell the properties have started.

Recognition and measurement

The Entity has certain non-current assets classified as held for sale, where their carrying amount will be recovered principally through a sale transaction, not through continuing use. Non-current assets held for sale are measured at the lower of their carrying amount or fair value less costs to sell. These assets are not depreciated while they are classified as held-for-sale.

31 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

13. Property, plant and equipment

(a) Total property, plant and equipment

32

014 Total Total '000 $ Total

Land and buildings 167 , Infrastructure systems Plant and equipment (39,314) Total Total

(270,281) assets Property, Property, assets plant and plant 7,139,856 9,529,354 5,541,201 9, 16,398,929 14,668,901 equipment Total

Land and Assets- under - Rail Assets under Plant and Rolling Property, Total Total Total

buildings construction543 systems construction equipment stock plant and Total '000 $

(5,336) equipment 697,184 665, 677,690 672,354 (31,641) $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000

At 30 June 2020 - - At cost - Gross carrying amount - 246,602 246,402 - 6,893,254 6,893,254 - - - 7,139,856 348 stock '000 $

(3,257) 667,394

At fair value - Gross carrying amount 281,870 Rolling - 281,870 8,550,300 - 8,550,300 29,790 697,184 9,529,354 667,394 667,394 645, 648,120 644,863 (22,046)

Sydney Metro Accumulated depreciation and impairment (60) - (60) (238,580) - (238,580) (9,595) (22,046) (31,641) (270,281) Net carrying amount 281,810 246,602 528,412 8,311,720 6,893,254 15,204,974 20,195 645,348 665,543 16,398,929

- - Notes to the financial statements equipment and Plant for the year ended 30 June 2020 At 30 June 2019 '000 $ 29,790 20,195 29,570 27,491 Restated at cost - Gross carrying amount - 246,061 (9,595) 246,061 (2,079) - 5,295,140 5,295,140 - - - 5,541,201

and Plant

Restated at fair value - Gross carrying equipment 298,456 - 298,456 8,190,868 - 8,190,868 29,570 648,120 677,690 9,167,014 13. Property, plant and equipment amount

Accumulated depreciation and impairment - - - (33,978) - (33,978) (2,079) (3,257) (5,336) (39,314)

Total

(a) Total property, plant and equipment Restated net carrying amount 298,456 '000 $ 246,061 544,517 8,156,890 5,295,140 13,452,030 27,491 644,863 672,354 14,668,901 (33,978)

(238,580) 6,893,254 8,550,300 5,295,140 8,190,868

15,204,974 13,452,030

- - - -

Total Land and buildings Infrastructure systems '000 $ Plant and equipment

assets 6,893,254 6,893,254 5,295,140 5,295,140

construction Total Assets under under Assets Land and Assets under Rail Assets under Plant and Rolling Property,

- Total Total- Total buildings construction systems construction equipment stock plant and

Rail equipment '000 $

(33,978) systems (238,580) 8,550,300 8,311,720 8,190,868 8,156,890 $ '000 $ '000 $ '000 $ '000 systems Infrastructure $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 At 30 June 2020

At cost - Gross carrying amount - 246,602 246,402 - 6,893,254 6,893,254 - - - - 7,139,856

456 517 (60)

Total 667,394 At fair value - Gross carrying amount 281,870 - 281,870 8,550,300 - 8,550,300 29,790 697,184 9,529,354 '000 $

Accumulated depreciation and impairment (60) - (60) (238,580) - (238,580)246,402 281,870 528,412 (9,595)246,061 298 , 544 , (22,046) (31,641) (270,281)

Net carrying amount 281,810 246,602 528,412 8,311,720 6,893,254 15,204,974- - 20,195- - 645,348 665,543 16,398,929

602 602

At 30 June 2019 32 '000 $ s

Restated at cost - Gross carrying amount - 246,061 246,061 - 5,295,140 5,295,140246, 246, 246,061 - 246,061 - - 5,541,201 Restated at fair value - Gross carrying

298,456 - 298,456 8,190,868 - construction 8,190,868 29,570 648,120 677,690 9,167,014 Assets under under Assets amount building Accumulated depreciation and impairment - - - (33,978) - (33,978) (2,079) (3,257) (5,336) (39,314)

- - - 456 456 Restated net carrying amount 298,456 246,061 544,517 8,156,890 5,295,140 13,452,030 (60) 27,491 644,863 672,354 14,668,901

'000 $ Land and Land 281,870 281,810 298 , 298 ,

buildings Land and Land

2020

Gross carrying carrying Gross

30 June

Gross carrying amount carrying Gross

- Gross carrying amount carrying Gross

- et carrying amount carrying et t cost Gross carrying amount carrying Gross Property, plant and equipment

Total property, plant and equipment stated a t fair value -

fair value value fair the year ended

2020 June 30 At At cost - At impairment and depreciation Accumulated amount carrying Net 2019 June 30 At a Restated Re amount impairment and depreciation Accumulated n Restated Notes to the financial statements Notes to the financial Sydney Metro Sydney for 13. (a)

32 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

13. Property, plant and equipment (continued)

(a) Total property, plant and equipment (continued)

Reconciliation

- ) A reconciliation of the carrying amount of each class of property, plant and equipment at the beginning and end of the c33 urrent reporting period is set out below:

Total Total 7,413 3,458

'000 $ 47,593 (1,716) 205,456 (10,043) 464,424 ( (104,617) (218,682)

property, property, Total plant and plant 2,273,003 14,661,488 14,661,488 Land and14,668,901 buildings 16,398,929 Infrastructure systems Plant and equipment equipment

Total Total Assets Assets

------Total 543 220 Land and Assets under 140 Rail Assets under Plant and Rolling property,

Total Total

'000 $ Total Total Total buildings construction 19, systems construction equipment stock plant and 672,354 672,354 672,354 665, (26,171)

equipment

- Notes $ '000 - - - $ '000- - - - $- '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000

348 Opening balance at 1 July 2019 283,574 246,061 529,635 140 8,156,890 5,302,609 13,459,499 27,491 644,863 672,354 14,661,488 stock '000 $ 19, Rolling Rolling 644,863 644,863 644,863 645, (18,655) Correction of prior period error 14,882 - 14,882 - (7,469) (7,469) - - - 7,413

Sydney Metro Restated opening balance at 1 July

- 298,456 - - 246,061- - - - 544- ,517 - 8,156,890 5,295,140 13,452,030 27,491 644,863 672,354 14,668,901 2019 Notes to the financial statements 220

Additions '000 $ - - - - 2,273,003 2,273,003 - - - 2,273,003 27,491 27,491 27,491 20,195 (7,516) Non cash addition 3,117 341 3,458 ------3,458 for the year ended 30 June 2020 and Plant equipment and Plant equipment

Disposals/write off 4 (100,211) (165) (100,376) - (364,048) (364,048) - - - (464,424)

13. Property, plant and equipment (continued)Reclassification between PPE classes (365) - 365 - 149,255 (149,475) (220) 220 - 220 - (220) Asset transfer (to)/from equity 24 Total 95,228 - 95,228 - (47,635) (47,635) - - - 47,593 '000 $

(7,469) (7,398) (1,716) 198,026 Reclassifications (to)/from other assets 15 - (47,635) - - - (104,617) (104,617) - - - (104,617) (364,048) (104,617) (192,451) 2,273,003 13,459,499 13,459,499 13,452,030 15,204,974

(a) Total property, plant and equipment (continued) Transfer to local councils (2,645) - (2,645) - (7,398) (7,398) - - - (10,043)

urrent reporting period is set out below:

Transfer (to)/from other transport - - - 2(g) - - - (1,716) (1,716) - - - (1,716) agencies Reconciliation '000 $

Depreciation/amortisation 2(d) (60) (7,469) - (7,398) (1,716) (60) (192,451) - (192,451) (7,516) (18,655) (26,171) (218,682) (47,635)

A reconciliation of the carrying amount of each class of property, plant and equipment at the beginning and end of the current reporting period is set out below: . (364,048) (149,475) (104,617) 5,302,609 5,302,609 5,295,140 2,273,003 6,893,254

Net revaluation increments less 6 (11,710) - (11,710) 198,026 - 198,026 - 19,140 19,140 205,456

construction

revaluation decrements under Assets

Total Land and buildings Infrastructure systems Plant and equipment

Net carrying amount at 30 June 2020 281,810 246,602 528,412 8,311,720 6,893,254 15,204,974 20,195 645,348 665,543 16,398,929

Assets ------

Rail Total Land and Assets under Rail Assets under '000 $ Plant and Rolling property, 149,255 198,026 Infrastructure systems Infrastructure Further details regardingTotal the fair value measurementsystems of property, plantTotal and equipment are disclosed in NoteTotal 16 . (192,451) 8,156,890 8,156,890 8,156,890 8,311,720 buildings construction systems construction equipment stock plant and

equipment

Notes $ '000 $ '000 $ '000 $ '000 $ '000 - $ '000 - - $ '000- $ '000 $ '000 $ '000 517 (60)

Total Total 283,574 246,061 529,635 8,156,890 5,302,609 13,459,4993,458 27,491 644,863 672,354 14,661,488 Opening balance at 1 July 2019 '000 $ 14,882 14,882 95,228 (2,645)

529,635 529,635 544 , 528,412 (11,710)

Correction of prior period error 14,882 - 14,882 - (7,469) (7,469)(100,376) - - - 7,413

- Restated opening balance at 1 July ------298,456 246,061 544,517 8,156,890 5,295,140 13,452,030 27,491 644,863 672,354 14,668,901 602 2019 341 365 (165)

Additions - - - - 2,273,003 '000 $ 2,273,003 - - - 2,273,003 246,061 246,061 246,061 246, 33 Non cash addition 3,117 341 3,458 ------3,458

construction Assets under under Assets Disposals/write off 4 (100,211) (165) (100,376)) - (364,048) (364,048) - - - (464,424)

Reclassification between PPE classes (365) 365 - 149,255 (149,475) (220) 220 - 220 -

Asset transfer (to)/from equity 24 95,228 - 95,228 - (47,635) (47,635)------47,593 456 (60) (365) 3,117 '000 $ Reclassifications (to)/from other assets 15 - - - -buildings and Land (104,617) (104,617) - - - (104,617) 14,882 14,882 95,228 (2,645)

283,574 283,574 298 , 281,810 (11,710)

(100,211) buildings Transfer to local councils (2,645) - (2,645) - and Land (7,398) (7,398) - - - (10,043) continued )

Transfer (to)/from other transport

2(g) - - - (1,716) (1,716) - - - (1,716) s 4 agencies 4 2 15 2(g) 2(d)

Depreciation/amortisation 2(d) (60) - (60) (192,451) - (192,451) (7,516) (18,655) (26,171) (218,682) Note

Net revaluation increments less

(11,710) - (11,710) 198,026 - 198,026 - 19,140 19,140 205,456 revaluation decrements

2020 Net carrying amount at 30 June 2020 281,810 246,602 528,412 8,311,720 6,893,254 15,204,974 20,195 645,348 665,543 16,398,929

error

Further details regarding the fair value measurement of property, plant and equipment30 June are disclosed in Note 16. period

pening balance at 1 July July 1 at balance pening

the year ended

pening balance at 1 July 2019 July 1 at balance pening Total property, plant and equipment (

O prior of Correction o Restated 2019 Additions addition Noncash Disposals/writeoff PPEclasses between Reclassification Asset transfer (to)/from equity assets other (to)/from Reclassifications councils local to Transfer Transfer (to)/from other transport agencies Depreciation/amortisation less increments revaluation Net decrements revaluation 2020 June 30 amountat carrying Net Sydney Metro Sydney for ( continued equipment and plant 13 . Property, (a) Reconciliation A reconciliation of the carrying amount of each class of property, plant and equipment at the beginning and end of the c Further details regarding the fair value measurement of property, plant and equipment are disclosed in Note 1 Notes to the financial statements Notes to the financial

33 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

13. Property, plant and equipment (continued)

(a) Total property, plant and equipment (continued)

Reconciliation (continued) 34

- - 48 2 Total Total 3,820

'000 $ Land and buildings Infrastructure systems Plant and equipment Total assets 31 for for 31 644,684 626 , (15,565) (15,835) (39,314) (860,868) (316,371) property, property, plant and plant 3,719,655 4, 2,566,581 4,355,632 14,668,901 14,668,901 equipment Total Total assets Total property,

Land- - and- - Assets- - under- - - - Rail Assets under Plant and Rolling plant and Refer Note Note Refer

Total buildings construction Total systems construction Total equipment stock Total equipment '000 $ 45,826 (5,336) 631,864 672,354 Notes $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000

Opening balance at 1 July 2018 ------Additions - - - - 3,719,655 3,719,655 - - - 3,719,655 stock '000 $ 45,826 (3,257) Rolling Rolling

Disposals 4 602,294 - - - 644,863 - (860,868) (860,868) - - - (860,868) Sydney Metro Reclassification between PPE classes 245,528 9,137 254,665 7,630,056 (8,516,585) (886,529) 29,570 602,294 631,864 -

Restated asset transfer (to)/from ------Notes to the financial statements equity 24 13,636 245,489 259,125 - 4,367,357 4,367,357 - - - 4,626,482 '000 $ 29,570 27,491 (2,079)

for the year ended 30 June 2020 Reclassifications (to)/from other assets equipment and Plant 15 - - - - 2,566,581 2,566,581 - - - 2,566,581 Plant and Plant Assets transferred to/from non-current equipment assets held for sale - (15,565) (15,565) ------(15,565) increase in transfer from local councils. Infrastructure systems Infrastructure councils. local from transfer in increase

13. Property, plant and equipment (continued) - - Transfer to local councils - - - - (316,371) (316,371) - - - (316,371) million increase in transfer to local councils. councils. local to transfer in increase million

illion Total 0 2,574 '000 $ m

Restated transfer from local councils 1,246 - 1,246 - 2,574 2,574 - - - 3,820

560,812 (a) Total property, plant and equipment (continued) (15,835) (33,978) (860,868) (886,529) (316,371)

Restated transfer (to)/from other 3,719,655 4,367,357 2,566,581 4,348,632 transport agencies 2(g) - - - 13,452,030 - (15,835) (15,835) - (15,835) and $1.2 and

Reconciliation (continued) Depreciation expense 2(d) ------(33,978) - (33,978) (2,079) (3,257) (5,336) (39,314) ffset by $10.

o Net revaluation increments less 2,574 revaluation decrements '000 $ 38,046 - 38,046 560,812 - 560,812 - 45,826 45,826 644,684 (15,835) (860,868) (316,371) Net increase in assets from 3,719,655 4,367,357 2,566,581 4,348,632 5,295,140 Land and buildings Infrastructure systems (8,516,585) Plant and equipment Total assets construction administrative restructure under Assets - 7,000 7,000 - 4,348,632 4,348,632 - - - 4,355,632 was partially was

Restated net carrying amount at 30 Total ------June 2019 298,456 246,061 544,517 8,156,890 5,295,140property, 13,452,030 27,491 644,863 672,354 14,668,901 Rail

Land and Assets under Rail Assets '000 $ under Plant and Rolling plant and

sset transfer from equity 560,812 (33,978) Infrastructure systems Infrastructure buildings construction Total systems constructionsystems Total equipment stock Total equipment Land and buildings was restated to $14.8 million higher in 2019, which7,630,056 includes $13.6 million increase in a8,156,890 sset transfer from equity and $1.2 million increase in transfer from local councils. Infrastructure systems was restated to $7.5 million higher in 2019, which includes $2.5 million increase in transfer from local councils that was partially offset by $10.0 million increase in transfer to local councils. Refer Note 31 for

Notes $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 ------Opening balance at 1 July 2018 - details regarding- restated prior- year balances.------Total increase in a in increase

1,246 7,000

'000 $ Additions - - - - 3,719,655 3,719,655 - 38,046 - - 3,719,655 254,665 259,125 544,517 (15,565)

Disposals 4 - - - - (860,868) (860,868) - - illion - (860,868) m

Reclassification between PPE classes 245,528 9,137 254,665 7,630,056 (8,516,585)- - - (886,529)- - - 29,570- - - 602,294 631,864 - Restated asset transfer (to)/from

9,137 7,000 equity 24 13,636 245,489 259,125 - 4,367,357 '000 $ 4,367,357 - - - 4,626,482 245,489 246,061 (15,565) Reclassifications (to)/from other assets 15 - - - - 2,566,581 2,566,581 - - - 2,566,581 34

ansfertr in fromincrease local councils that construction

) Assets transferred to/from non-current under Assets

assets held for sale - (15,565) (15,565) ------(15,565) illion ------m Transfer to local councils - - - - (316,371) (316,371) - - - (316,371) 1,246 '000 $ 2.5 Restated transfer from local councils 1,246 - 1,246 - 2,574 13,636 2,574 - 38,046 - - 3,820 Land and buildings and Land 245,528 298,456 , which includes $13.6 includes which 2019 , buildings Restated transfer (to)/from other and Land transport agencies 2(g) - - - - (15,835) (15,835) - (15,835)

5 s 4 4 Depreciation expense 2(d) - - - (33,978) - (33,978) (2,079) (3,257) in higher (5,336) (39,314) 1 2

2(g) 2(d) Net revaluation increments less Note revaluation decrements 38,046 - 38,046 560,812 - 560,812 - 45,826 45,826 644,684

Net increase in assets from , which includes $ includes which 2019 , 14.8 million

administrative restructure - 7,000 7,000 - 4,348,632 4,348,632 - - - 4,355,632 2020

current Restated net carrying amount at 30 June 2019 298,456 246,061 544,517 8,156,890 5,295,140 13,452,030 27,491 644,863 672,354 14,668,901

councils local restatedto $

30 June

1 July 2018 July 1

Land and buildings was restated to $14.8 million higher in 2019, which includes $13.6 million increase in asset transfer from equity and $1.2 million increase in transfer from local councils. Infrastructure systems at

was from was restated to $7.5 million higher in 2019, which includes $2.5 million increase in transfer from local continued ) councils that was partially offset by $10.0 million increase in transfer to local councils. Refer Note 31 for details regarding restated prior year balances. local councils local 30 at amount carrying et sset transfer (to)/from

ransfer ransfer ransfer(to)/from other

to

the year ended

Total property, plant and e quipment (continued) and plant property, Total balance Opening Additions Disposals PPEclasses between Reclassification a Restated equity assets other (to)/from Reclassifications non - to/from transferred Assets assets held for sale Transfer t Restated t Restated agencies transport expense Depreciation less increments revaluation Net decrements revaluation from assets in increase Net administrative restructure n Restated 2019 June

details regarding restated prior year balances. year prior restated regarding details Notes to the financial statements Notes to the financial Sydney Metro Sydney for ( continued equipment and plant 13 . Property, (a) buildings and Land Reconciliation ( Reconciliation was restated to $7.5 million higher in in higher million $7.5 to wasrestated

34 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

13. Property, plant and equipment (continued)

(b) Property, plant and equipment held and used by the Entity

Infrastructure 35 Plant and Land and buildings Total Total

'000 $ systems equipment

(39,314) (270,281) Property, Property, plant and plant 7,047,238 9,528,942 5,459,076 9,165,381

16,305,899 14,585,143 equipment Total Land and Assets under Assets under Plant and Property,

Total Rail systems Total Rolling stock Total buildings construction- - construction equipment plant and 184 543

641 ) equipment Total

'000 $ (5,336) 697, 665, 677,690 672,354 $ '000 $ '000(31, $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 At 30 June 2020

At cost - Gross carrying amount - 246,602 246, 602 - 6,800,636 6,800,636 - - - 7,047,238 ) - -

At fair value - Gross carrying 94 281,458 3 - 348 281,458 8,550,300 - 8,550,300 29,790 667,394 697,184 9,528,942 '000 $ amount 2,046 (3,257) 667, 645, 648,120 644,863 Sydney Metro Accumulated depreciation and (2 (60) - (60) (238,580) - (238,580) (9,595) (22,046) (31,641) (270,281) impairment Rolling stock Rolling

Notes to the financial statements Net carrying amount 281,398 246,602 528,000 8,311,720 6,800,636 15,112,356 20,195 645,348 665,543 16,305,899

- - for the year ended 30 June 2020 At 30 June 2019

Restated at cost - Gross '000 $ 29,790 20,195 29,570 27,491

(9,595) (2,079) Plant and Plant - 246,061 246,061 - 5,213,015 5,213,015 - - - 5,459,076 carrying amount equipment Plant and Plant 13. Property, plant and equipment (continued)Restated at fair value - Gross equipment 296,823 - 296,823 8,190,868 - 8,190,868 29,570 648,120 677,690 9,165,381 carrying amount

Accumulated depreciation and (b) Property, plant and equipment held and used by the Entity - - - (33,978) - (33,978) (2,079) (3,257) (5,336) (39,314) impairment

Total '000 $

Restated net carrying amount 296,823 246,061 542,884 (33,978) 8,156,890 5,213,015 13,369,905 27,491 644,863 672,354 14,585,143 (238,580)

6,800,636 8,550,300 5,213,015 8,190,868 15,112,356 13,369,905 Infrastructure Plant and Land and buildings

systems equipment - - - -

'000 $ Total

Land and Assets under Assets under 6,800,636 6,800,636 Plant5,213,015 and 5,213,015 Property, Total Rail systems Total Rolling stock Total buildings construction construction equipment plant and construction Assets under under Assets equipment

- - $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 systems

At 30 June 2020 '000 $ (33,978) (238,580) Infrastructure Infrastructure At cost - Gross carrying amount - 246,602 246,602 - 6,800,636 6,800,6368,550,300 8,311,720 8,190,868 - 8,156,890 - - 7,047,238

At fair value - Gross carrying systems Rail 281,458 - 281,458 8,550,300 - 8,550,300 29,790 667,394 697,184 9,528,942

amount -

Accumulated depreciation and 02 6 (60) - (60) (238,580) - (238,580)(60) (9,595) (22,046) (31,641) (270,281) Total impairment '000 $ 246, 281,458 528,000 246,061 296,823 542,884 Net carrying amount 281,398 246,602 528,000 8,311,720 6,800,636 15,112,356 20,195 645,348 665,543 16,305,899 35 At 30 June 2019

)

Restated at cost - Gross - - - -

- 246,061 246,061 the Entity - 5,213,015 5,213,015 - - - 5,459,076 carrying amount '000 $

Restated at fair value - Gross

296,823 - 296,823 8,190,868 - 8,190,868246,602 246,602 246,061 29,570 246,061 648,120 677,690 9,165,381

carrying amount Accumulated depreciation and construction continued

- - - (33,978) under Assets - (33,978) (2,079) (3,257) (5,336) (39,314) impairment

- - -

Restated net carrying amount 296,823 246,061 542,884 8,156,890 buildings 5,213,015 13,369,905 27,491 644,863 672,354 14,585,143 (60) '000 $ held and used by

281,458 281,398 296,823 296,823 buildings Land and Land

Land and Land 2020

equipment

Gross

30 June

Gross

-

Gross carrying carrying Gross

- et carrying amount carrying et

t cost t fair value - Gross carrying amount carrying Gross

Property, plant and June 2019 June the year ended

2020 June 30 At At cost - At fair value amount and depreciation Accumulated impairment amount carrying Net 30 At a Restated amount carrying a Restated amount carrying and depreciation Accumulated impairment n Restated Sydney Metro Sydney statements Notes to the financial for 13 . Property, plant and equipment ( (b)

35 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

13. Property, plant and equipment (continued)

(b) Property, plant and equipment held and used by the Entity (continued)

Reconciliation

- ) 36 A reconciliation of the carrying amount of each class of property, plant and equipment held and used by the Entity at the beginning and end of the current reporting period is set out below: Total Total 7,413 7,413 3,458 1,221 '000 $

47,593 (1,716) 205,456 Total Total (10,043) 464,424 Assets ( (104,617) (218,682) property, property, plant and plant 2,262,510 14,577,730 14,577,730 14,585,143 16,305,899

equipment Land and buildings Total Infrastructure systems Plant and equipment Assets

------Total 543 220 140

Land and Assets under Rail Assets under Plant and Rolling property, Total Total

'000 $ Total Total Total 19, 672,354 672,354 buildings672,354 construction 665, systems construction equipment stock plant and (26,171)

equipment

Notes $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000

------281,941 246,061 528,002 8,156,890 5,220,484 13,377,374 27,491 644,863 672,354 14,577,730 348 Opening balance at 1 July 2019 140 stock '000 $

14,882 - 19, 14,882 - (7,469) (7,469) - - - 7,413 Correction of prior period error Rolling 644,863 644,863 644,863 645, (18,655)

Restated opening balance at 1 July ------

296,823 246,061 542,884 8,156,890 5,213,015 13,369,905 27,491 644,863 672,354 14,585,143 Sydney Metro 2019 220

Additions '000 $ - - - - 2,262,510 2,262,510 - - - 2,262,510 27,491 27,491 27,491 20,195 (7,516) Notes to the financial statements

Non cash addition and Plant 3,117 341 3,458 ------3,458 equipment for the year ended 30 June 2020 Disposals/write off equipment and Plant 4 (100,211) (165) (100,376) - (364,048) (364,048) - - - (464,424)

Reclassification between PPE classes (365)- 365 - - 149,255 (149,475) (220) 220 - 220 - Asset transfer (to)/from equity 24 95,228 - 95,228 - (47,635) (47,635) - - - 47,593 (220) Total

13. Property, plant and equipment (continued) '000 $ (7,469) (7,469) (7,398) (1,716) 198,026 Reclassifications (to)/from other assets - (47,635) - - - (104,617) (104,617) - - - (104,617) (364,048) (104,617) (192,451) 2,262,510 13,377,374 13,377,374 13,369,905 15,112,356

Transfer of asset to local councils (2,645) - (2,645) - (7,398) (7,398) - - - (10,043) (b) Property, plant and equipment held and used by the Entity (continued) Transfer (to)/from other transport agencies - - - (1,716) (1,716) - - - (1,716)

- - - -

Depreciation/amortisation 2(d) (60) - (60) (192,451) - (192,451) (7,516) (18,655) (26,171) (218,682) '000 $ under under

Reconciliation at the beginning and end of the current reporting period is set out below:

Net revaluation increments less (7,469) (7,398) (1,716)

(11,710) (47,635) - (11,710) 198,026 - 198,026 - 19,140 19,140 205,456 (364,048) (149,475) (104,617) 5,220,484 5,220,484 revaluation decrements 5,213,015 2,262,510 6,800,636

A reconciliation of the carrying amount of each class of property, plant and equipment held and used by the Entity at the beginning and end of the current reporting period is set out below: 1 construction . Termination of operating lease Assets 1,221 - 1,221 ------1,221

Land and buildings Entity the Total ------Net carrying amount at 30 June 2020Infrastructure systems 281,398 246,602Plant and528,000 equipment 8,311,720 6,800,636 15,112,356 20,195 645,348 665,543 16,305,899 Assets

Rail the Entity d by '000 $ Total

1 149,255 198,026 Infrastructure systems Infrastructure Upon termination of the leases, the property previoussystems leased out as operating lease became held and used by the Entity. Land and Assets under Rail Assets under (192,451) Plant and Rolling property, 8,156,890 8,156,890 8,156,890 8,311,720 Total Total Total buildings construction systems construction equipment stock plant and

equipment - - - -

Notes $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 (60) $ '000 $ '000 $ '000 $ '000 Total Total 3,458 1,221 '000 $ 14,882 14,882 95,228 (2,645) 281,941 246,061 528,002 8,156,890 5,220,484 13,377,374 27,491 644,863 672,354 14,577,730 528,002 528,002 Opening balance at 1 July 2019 542,884 528,000 (11,710)

14,882 - 14,882 - (7,469) (100,376) (7,469) - - - 7,413 Correction of prior period error

Restated opening balance at 1 July ------602 296,823 246,061 542,884 8,156,890 5,213,015 341 13,369,905365 27,491 644,863 672,354 14,585,143 (165)

2019 '000 $ 246,061 246,061 246,061 246, continued )

Additions - - ( - - 2,262,510 2,262,510 - - - 2,262,510 Non cash addition 3,117 341 3,458 ------3,458 construction Assets under under Assets 36

Disposals/write off 4 (100,211) (165) (100,376) - (364,048) (364,048) - - - (464,424)

- - - )

Reclassification between PPE classes (365) 365 - buildings and Land 149,255 (149,475) (220) 220 - 220 -

(60) the Entity (365) 3,117 1,221 Asset transfer (to)/from equity 24 95,228 - 95,228 - '000 $ (47,635) (47,635) - - - 47,593 14,882 14,882 95,228 (2,645)

281,941 281,941 296,823 281,398 (11,710)

(100,211) buildings Reclassifications (to)/from other assets - - - and Land - (104,617) (104,617) - - - (104,617)

Transfer of asset to local councils (2,645) - (2,645) - (7,398) (7,398) - - - (10,043)

continued

4 Transfer (to)/from other transport agencies - - - (1,716) 4 (1,716) - - - (1,716) 2 Depreciation/amortisation 2(d) (60) - (60) (192,451) - (192,451) 2(d) (7,516) (18,655) (26,171) (218,682) Notes

Net revaluation increments less held and used by

(11,710) - (11,710) 198,026 - 198,026 - 19,140 19,140 205,456 revaluation decrements

1

Termination of operating lease 1,221 - 1,221 ------1,221

Net carrying amount at 30 June 2020 281,398 2020 246,602 528,000 8,311,720 6,800,636 15,112,356 20,195 645,348 665,543 16,305,899

equipment 1

1

error

Upon termination of the leases, the property previous leased out as operating lease became held and used by the Entity.

30 June period

pening balance at 1 July July 1 at balance pening

ns Property, plant and equipment ( the year ended

Property, plant and

2019 July 1 at balance Opening prior of Correction o Restated 2019 Additio addition Noncash /writeDisposals off PPEclasses between Reclassification Asset transfer (to)/from equity assets other (to)/from Reclassifications councils local to asset of Transfer Transfer (to)/from other transport agencies Depreciation/amortisation less increments revaluation Net decrements revaluation lease operating of Termination 2020 June 30 amountat carrying Net Upon termination of the leases, the property previous leased out as operating lease became held and used by by used and becameheld lease operating as out leased previous property the leases, the of Upontermination

Notes to the financial statements Notes to the financial Sydney Metro Sydney for 13 . (b) Reconciliation A reconciliation of the carrying amount of each class of property, plant and equipment held and use 1

36 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

13. Property, plant and equipment (continued)

(c) Property, plant and equipment where entity is lessor under operating leases

Total Land and buildings Infrastructure systems Plant and equipment 37 assets

- - - Total 618 412 030 758 633 Assets 030 ,

Total Total Total Land and Assets under Rail Plant and Rolling Property, 2 1, Total Total '000 $ '000 $ 9 93 , 82,125 83,

assets Total under Total Total 83,758 10,493 93 , buildings construction systems (1,221) equipment stock plant and Property, Property,

plant and plant construction property, property, plant and plant

equipment equipment equipment Total Assets

- - $ '000- - - - - $ '000- $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 - - -

At 30 June 2020 Total Total Total '000 $ At cost - Gross carrying amount - - - '000 $ - 92,618 92,618 - - - 92,618 At fair value - Gross carrying amount 412 - 412 ------412

- - -

Accumulated depreciation and ------

impairment stock '000 $ '000 Rolling Rolling stock $

Net carrying amount Rolling 412 - 412 - 92,618 92,618 - - - 93,030

equipment

Sydney Metro At 30 June 2019 - - - At cost - Gross carrying amount - - - - 82,125 82,125 - - - 82,125

'000 $ Notes to the financial statements At fair value - Gross carrying amount - - 1,633------1,633 ------1,633 Plant and Plant

Accumulated depreciation andand Plant equipment and Plant equipment for the year ended 30 June 2020 '000 $ ------impairment

and Plant

equipment

Net carrying amount 1,633 - 1,633 - - 82,125 82,125 - - - 83,758

13. Property, plant and equipment (continued) 618 Total

- - - - '000 $

82,125 10,493 92 , 618 618 ,

Reconciliation Total 2 '000 $

(c) Property, plant and equipment where entity is lessor under operating leases 9 92 , 82,125 82,125 A reconciliation of the carrying amount of each class of property, plant and equipment where the Entity is lessor under operating lease at the beginning and end of the current reporting

-

period is set out below: 618 Total

Land and buildings Infrastructure systems Plant and equipment '000 $ - - - -

82,125 10,493 92 , Total Land and buildings Infrastructure systems assets Plant and equipment 618 618 Assets , Total 2 . '000 $

under under Assets

9 92 , 82,125 82,125 Total Assets

Land and Assets under Rail Plant and construction Rolling Property, Total underLand and Total Assets under under Assets Rail TotalAssets under Plant and Rolling property, buildings construction systems equipmentis lessor under operating lease at the beginning and end of the current reporting stock plant and

Total Total Total

construction

buildings construction systems- - - construction equipment stock plant and construction equipment the Entity

Rail equipment

$ '000 $ '000 $ '000 $ '000 - $- '000- - - $- '000- - $ '000 $ '000 $ '000 $ '000 Notes $ '000 $ '000 $ '000 '000 $ $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000

systems Infrastructure Rail systems At 30 June 2020 Entity the '000 $ - - - Infrastructure systems Infrastructure

systems

At cost - Gross carrying amount - - - - 92,618 92,618 - - - 92,618 Opening balance at 1 July 2019 1,633 - 1,633 - - 82,125 82,125 - - - 83,758 At fair value - Gross carrying amount 412 - 412 ------412 Purchase of assets 412 10,493 10,493 10,493

Total Total 1,633 - - - - Accumulated depreciation and 1 '000 $ ------(1,221) - - Termination of operating lease (1,221) (1,221) - - - - - (1,221)

412 412 impairment 633 633 Total 1, 1, '000 $

Net carrying amount at 30 June 2020 412 - 412 - 92,618 92,618 - - - 93,030

Net carrying amount 412 - 412 - 92,618 92,618 - - - - - 93,030

'000 $ At 30 June 2019 1Upon termination of the leases, the property previous leased out as operating lease became held and used by the Entity. At cost - Gross carrying amount - - - - 82,125 82,125 - - - 82,125

------At fair value - Gross carrying amount 1,633 - 1,633 s ------1,633 construction Accumulated depreciation and under Assets 37

- - - - '000 $ ------impairment uilding

b

Net carrying amount 1,633 - 1,633 - 82,125 82,125 - - - 83,758 construction Assets under under Assets 412 Land and buildings and Land 1,633

'000 $ (1,221)

- - - - Land and Land buildings Reconciliation and Land 412 412 633 633

1, 1,

A reconciliation of the carrying amount of each class of property, plant and equipment where the Entity '000 $ is lessor under operating lease at the beginning and end of the current reporting buildings period is set out below: and Land

Notes

Total

Land and buildings Infrastructure systems Plant and equipment

Assets

Total

Land and Assets2020 under Rail Assets under Plant and Rolling property,

Total Total Total buildings construction systems construction equipment stock 1 plant and equipment

Notes $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000

30 June

- - -

Opening balance at 1 July 2019 1,633 - 1,633 - 82,125 82,125 - - - 83,758 Gross carrying amount carrying Gross amount carrying Gross Purchase of assets 10,493 10,493 10,493

- - Termination of operating lease 1 (1,221) (1,221) - - - - - (1,221) Gross carrying amount carrying Gross amount carrying Gross

Net carrying amount at 30 June 2020 412 - Property, plant and equipment where entity is lessor under operating leases 412 - 92,618 92,618 - - - 93,030 chase of assets of chase the year ended

2020 June 30 At At cost - At fair value and depreciation Accumulated impairment amount carrying Net 2019 June 30 At At cost - At fair value and depreciation Accumulated impairment amount carrying Net 2019 July 1 at balance Opening Pur lease operating of Termination 2020 June 30 amountat carrying Net 1 by used and becameheld lease operating as out leased previous property the leases, the of Upontermination Sydney Metro Sydney for 13 . Property, plant and equipment (continued) (c) Reconciliation A reconciliation of the carrying amount of each class of property, plant and equipment where 1 Notes to the financial statements Notes to the financial Upon termination of the leases, the property previous leased out as operating lease became held and used by the Entity. period is set out below:

37 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

13. Property, plant and equipment (continued)

Recognition and measurement

Acquisition of property, plant and equipment

Property, plant and equipment comprise land and buildings, plant and equipment (general plant and equipment and finance lease assets) and infrastructure systems.

(i) Capitalisation and initial recognition

The cost method of accounting is used for the initial recording of all acquisitions of assets controlled by the Entity in accordance with AASB 116 Property, Plant and Equipment. Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire the asset at the time of its acquisition or construction or, where applicable, the amount attributed to that asset when initially recognised in accordance with the requirements of other Australian Accounting Standards.

Assets acquired at no cost, or for nominal consideration, are initially recognised at their fair value at the date of acquisition.

Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at measurement date.

Where payment for an asset is deferred beyond normal credit terms, its cost is the cash price equivalent, i.e. deferred payment amount is effectively discounted over the period of credit.

The cost of assets constructed for own use includes the purchase cost, other directly attributable costs and the initial estimates of dismantling and restoration costs.

(ii) Capitalisation thresholds

Property, plant and equipment and intangible assets costing $5,000 and above individually (or forming part of a network costing more than $5,000) are capitalised.

(iii) Valuation of property, plant and equipment

Subsequent to initial recognition, property, plant and equipment assets are valued in accordance with NSW Treasury Accounting Policy “Valuation of Physical Non – Current Assets at Fair Value” Policy and Guidelines paper (TPP 14-01). This policy adopts fair value in accordance with AASB 13 Fair Value Measurement and AASB 116 Property, Plant and Equipment.

Property, plant and equipment is measured at the highest and best use by market participants that is physically possible, legally permissible and financially feasible. The highest and best use must be available at a period that is not remote and take into account the characteristics of the asset being measured, including any socio-political restrictions imposed by government. In most cases, after taking into account these considerations, the highest and best use is the existing use. In limited circumstances, the highest and best use may be a feasible alternative use, where there are no restrictions on use or where there is a feasible higher restricted alternative use.

38 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

13. Property, plant and equipment (continued)

Recognition and measurement (continued)

(iv) Revaluation of property, plant and equipment

Fair value of property, plant and equipment is based on a market participant’s perspective, using valuation techniques (market approach, cost approach, income approach) that maximise relevant observable inputs and minimise unobservable inputs. Refer Note 16 for further information regarding fair value.

Where there is no available market evidence, the asset’s fair value is measured at its market buying price, the best indicator of which is current replacement cost.

The current replacement cost is used to revalue specialised buildings (designed for a specific limited purpose), infrastructure systems and certain plant and equipment. Current replacement cost for these types of assets is based on ‘incremental optimised replacement cost’. Optimised replacement cost is the minimum cost, in the normal course of business, to replace the existing asset with a technologically modern equivalent asset with the same economic benefits, adjusting for any overdesign, overcapacity and redundant components. Incremental optimisation is limited to the extent that optimisation can occur in the normal course of business with commercially available technology.

Land and buildings will be revalued at least once every three years and each other class of property, plant and equipment at least every five years or with sufficient regularity to ensure that the carrying amount of each asset in the class does not differ materially from its fair value at reporting date. Revaluations are performed by independent professionally qualified valuers.

The latest comprehensive revaluation of property, plant and equipment is summarised as follows:

Asset type Latest comprehensive revaluation date Rail land 30 June 2019 Rail Infrastructure 5 May 2019 Rolling stock 5 May 2019 Specialised plant and equipment 5 May 2019

Interim revaluations are conducted between comprehensive revaluations where cumulative changes to indicators suggest fair value may differ materially from carrying value. A revaluation assessment was completed on 30 June 2020. The entity used an external professionally qualified valuer to conduct the interim revaluations. Refer Note 16 for detail of the interim revaluation.

Non-specialised assets with short useful lives are measured at depreciated historical cost, as an approximation of fair value. This is because any difference between fair value and depreciated historical cost is unlikely to be material.

When revaluing non-current assets using the cost approach, the gross amount and the related accumulated depreciation are separately restated.

For other assets valued using other valuation techniques, any balances of accumulated depreciation at the revaluation date in respect of those assets are credited to the asset accounts to which they relate. The net asset accounts are then increased or decreased by the revaluation increments or decrements.

39 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

13. Property, plant and equipment (continued)

Recognition and measurement (continued)

(iv) Revaluation of property, plant and equipment (continued)

Revaluation increments are credited directly to the asset revaluation surplus, except that, to the extent that an increment reverses a revaluation decrement in respect of that class of asset previously recognised as an expense in the net result, the increment is recognised immediately as a gain in the net result. Revaluation decrements are recognised immediately as a loss in the net result, except that, to the extent that a credit balance exists in the asset revaluation surplus in respect of the same class of assets, they are debited directly to the asset revaluation surplus.

As a not-for-profit reporting entity, revaluation increments and decrements are offset against one another within a class of non-current assets, but not otherwise.

Where an asset that has previously been revalued is disposed of, any balance remaining in the asset revaluation surplus in respect of that asset is transferred to accumulated funds.

(v) Impairment of property, plant and equipment

As a not-for-profit reporting entity with no cash generating units, impairment under AASB 136 Impairment of Assets (AASB 136) is unlikely to arise. As property, plant and equipment is carried at fair value or an amount that approximates fair value, impairment can only arise in the rare circumstances where the costs of disposal are material. Specifically, impairment is unlikely for the Entity given that AASB 136 modifies the recoverable amount test for non-cash generating assets of not-for- profit entities to the higher of fair value less costs of disposal and current replacement cost, where current replacement cost is also fair value. This means that, for an asset already measured at fair value, impairment can only arise if selling costs are material. Selling costs are regarded as immaterial.

Notwithstanding this, the Entity reviews the carrying values of major assets for objective evidence of impairment. Where such an indication exists, an estimate of the recoverable amount is made. An impairment loss is recognised in the Statement of Comprehensive Income when the carrying amount of an asset exceeds its recoverable amount unless the asset has been revalued in which case the impairment loss is treated as a revaluation decrease. When the impairment subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(vi) Depreciation of property, plant and equipment

Depreciation is provided for on a straight-line basis for all depreciable assets so as to write off the depreciable amount of each asset as it is consumed over its useful life to the Entity.

All material identifiable components of assets are depreciated separately over their useful lives.

Land is not a depreciable asset. Buildings which have been acquired for future transport infrastructure are not depreciated as these assets are not purchased to generate revenue and are ultimately demolished for transport infrastructure projects. The expected useful lives of property, plant and equipment for depreciation purposes are as follows:

Asset class Useful lives Infrastructure systems 15 – 100 years Plant and equipment 4 – 35 years Rolling stock 35 years Leasehold Improvement 4 – 5 years Right-of-use assets 2 – 5 years

40 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

13. Property, plant and equipment (continued)

Recognition and measurement (continued)

(vi) Depreciation of property, plant and equipment (continued)

The asset residual values, useful life and depreciation methods are reviewed, and adjusted, if appropriate, at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in assets are considered to modify the depreciation period or method, as appropriate, and are treated as changes in accounting estimates and adjusted prospectively.

During the year, the Entity conducted a review of the useful life of its infrastructure assets, which resulted in changes in the remaining useful life of these assets. The effect of these changes on actual and expected depreciation expense is an annual reduction of $14 million from 1 July 2019.

(vii) Major inspection costs

When each major inspection is performed, the labour cost of performing major inspections for faults is recognised in the carrying amount of an asset as a replacement of a part, if the recognition criteria are satisfied.

(viii) Restoration costs

The estimated cost of dismantling and removing an asset and restoring the site is included in the cost of an asset, to the extent it is recognised as a liability. If the effect of the time value of money is material, these costs are discounted at the appropriate market yields on government bonds.

(ix) Maintenance

Day-to-day servicing costs or maintenance are charged as expenses as incurred, except where they relate to the replacement of a part or a component of an asset, in which case the costs are capitalised and depreciated.

(x) Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Gains and losses on disposal are determined by comparing the proceeds with the carrying amount of the asset and are included in the Statement of Comprehensive Income.

(xi) Right-of-use assets acquired by lessees

From 1 July 2019, AASB 16 Leases (AASB 16) requires a lessee to recognise a right-of-use asset for most leases. The entity has elected to present right-of-use assets separately in the Statement of Financial Position.

Therefore, at that date property, plant and equipment recognised under leases previously treated as finance leases under AASB 117 are derecognised.

The right-of use assets arising from these leases are recognised and included in the separate line item together with those right-of-use assets arising from leases previously treated as operating leases under AASB117.

Further information on leases is contained in Note 14.

The Entity has adopted the option to not apply AASB 16 to assets that would be classified as service concession assets in accordance with AASB 1059 Service Concession Arrangements: Grantors. The entity continues to apply its existing accounting policy to these assets until AASB 1059 is applied.

41 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

14. Leases

(a) Entity as a lessee

The Entity leases various properties, equipment and motor vehicles. Lease contracts are typically made for fixed periods of one to five years, but may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. The Entity does not provide residual value guarantees in relation to leases.

Extension and termination options are included in a number of property and equipment leases. These terms are used to maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Entity and not by the respective lessor. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option.

Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Potential future cash outflows of $2.5 million have not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the lessee. During FY2019-20, the financial effect of revising lease terms to reflect the effect of exercising extension and termination options was a Nil increase in recognised lease liabilities and right-of-use assets.

From 1 July 2019, AASB 16 Leases (AASB 16) requires a lessee to recognise a right-of-use asset and a corresponding lease liability for most leases.

The Entity has elected to recognise payments for short-term leases and low value leases as expenses on a straight-line basis, instead of recognising a right-of-use asset and lease liability. Short-term leases are leases with a lease term of 12 months or less. Low value leases are leases with a fair value of $10,000 or less when new and comprise mainly motor vehicle leases. The Entity has $1.0 million of short term and $1,000 low value leases that have not been included in the lease liability or right-of-use assets, and were capitalised in Property, Plant and Equipment as directly attributable costs; there was also $9,000 of short-term leases expensed in FY2019-20.

Right-of-use assets under leases

Land and Plant and Total buildings equipment Notes $ '000 $ '000 $ '000

Balance at 1 July 2019 Recognition of right-of-use asset on initial application of AASB 16 16,794 21 16,815 Adjusted Balance at 1 July 2019 16,794 21 16,815 Additions 20,976 17 20,993 Impairment losses 5 (5,950) - (5,950) Depreciation expense 2(d) (6,519) (17) (6,536) Balance at 30 June 2020 25,301 21 25,322

Impairment losses for right of use assets

The COVID-19 pandemic occurring throughout the 2019-20 financial year had a negative effect on the NSW and global economies. COVID-19 significantly impacted the market rent for general office accommodation, and therefore the value of some right of use assets in the Statement of Financial Position.

The Entity has undertaken an impairment assessment for the above right-of-use assets to determine whether the carrying amount exceeded their recoverable amount. Impacted right-of-use assets were written down to their recoverable amounts by reference to the right-of-use asset’s fair value less costs of disposal and an impairment loss was recognised.

42 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

14. Leases (continued)

(a) Entity as a lessee (continued)

Impairment losses for right of use assets (continued)

The Entity recognised impairment losses for right of use assets during the 2019-20 financial year of $5.95 million relating to right-of-use asset – Land and Buildings. Impairment losses are included in other gains/(losses) (note 5) in the Statement of Comprehensive Income.

There is no impairment loss in relation to the right-of-use assets – plant and equipment, as these are leased motor vehicles that are expected to depreciate over their useful life without significant upward or downward movements in fair value in accordance with TC 20-2 AASB 16 Leases Subsequent Measurement of Right of Use Assets.

The recoverable amounts determined with reference to right of use assets’ fair value less costs of disposal were determined using the valuation techniques detailed in the following table.

Fair Value Hierarchy of Asset Valuation Technique Key Assumptions fair value less cost of Description disposal assessment Right of use Current replacement cost (CRC) approach • The assets were Level 3 asset – Land – assets are valued based on the net recognised at fair value and Buildings replacement cost of a new equivalent asset at the time of initial within the same geographical market and recognition or lease remaining lease term. The net replacement commencement date. costs were calculated based on the market • Cost of disposals is rent forecasts from JLL Real Estate immaterial Intelligence Services (REIS), or Property • The rent profile (fixed NSW’s historical rent data for regional percentage, market rent markets at the valuation date, where the review, consumer price market rent forecast as at 30 June 2019 index (CPI) or was the base year. combination) at the lease commencement date represents future market rent forecasts. • Regional market rents are linked with CPI.

The recoverable amounts of the right of use assets for which an impairment loss has been recognised during the financial year, and the level of fair value hierarchy for the right of use assets for which the recoverable amounts are determined with reference to their fair value less costs of disposal are:

Land and Plant and Total buildings equipment $ '000 $ '000 $ '000

Fair value less costs of disposal: Level 1 - - - Level 2 - - - Level 3 25,301 21 25,322 Total 25,301 21 25,322

The discount rate ranges employed in present value technique computations of recoverable amounts is summarised in the below table.

43 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

14. Leases (continued)

(a) Entity as a lessee (continued)

Impairment losses for right of use assets (continued)

Recoverable amount Current measurement discount rates Previous measurement discount rates Fair value less cost of disposal – Internal borrowing rates at the valuation Internal borrowing rates as at 1 July discounted cash flow technique date. 2019 for any leases recognised upon transition to AASB 16 Leases, or at the lease commencement date if the lease commenced after 1 July 2019.

Lease liabilities

Lease liabilities $ '000

Balance at 1 July 2019 - Recognition of right-of-use asset on initial application of AASB 16 18,441 Adjusted Balance at 1 July 2019 18,441 Additions 20,993 Interest expenses 219 Payments (7,783) Balance at 30 June 2020 31,870

The lease liability above as at 1 July 2019 includes back-to-back subleases where the Entity is an intermediate lessor, a lease receivable is recognised as oppose to right-of-use assets for these subleases.

The following amounts were recognised in the Statement of Comprehensive Income for the year ending 30 June 2020 in respect of leases where the Entity is the lessee. $ '000

Depreciation expense of right-of-use assets 116 Interest expense on lease liabilities 219 Expense relating to short-term leases 9 Expenses relating to leases of low-value assets - Variable lease payments, not in lease liabilities - Income from subleasing right of use assets - Gains or losses from sale and leaseback - Total amount recognised in the statement of comprehensive income 344

The entity had total cash outflows for leases of $7.8 million in FY2019-20.

Future minimum lease payments under non-cancellable leases as at 30 June 2019 are as follows:

2019

$ '000

Within one year 5,596

Later than one year and not later than five years 460

Later than five years -

Total (including GST) 6,056

Less: GST recoverable from Australian Tax office (551)

Total (excluding GST) 5,505

44 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

14. Leases (continued)

(a) Entity as a lessee (continued)

Leases at significantly below-market terms and conditions principally to enable the Entity to further its objectives

The Entity entered into leases with various government agencies for periods between 1 to 5 years. The lease premises are used by the Entity in order to obtain access to the sites in order to undertake the metro constriction works. The lease contracts specifies lease payments between $1 to $100 per annum. As such, these leases do not have a material impact on the Entity’s operation.

Recognition and measurement (under AASB 16 from 1 July 2019)

The Entity assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The entity recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets, except for short-term leases and leases of low-value assets.

(i) Right-of-use assets

The entity recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are initially measured at the amount of initial measurement of the lease liability (refer ii below), adjusted by any lease payments made at or before the commencement date and lease incentives, any initial direct costs incurred, and estimated costs of dismantling and removing the asset or restoring the site.

The right-of-use assets are subsequently measured at cost. They are depreciated on a straight-line basis over the shorter of the lease term or the estimated useful lives of the assets, as follows:

• Land and buildings: 2 – 5 years; and • Motor vehicles: 2 – 3 years.

If ownership of the leased asset transfers to the Entity at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

The right-of-use assets are also subject to impairment. The entity assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Entity estimates the asset’s recoverable amount. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. After an impairment loss has been recognised, it is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the net result.

(ii) Lease liabilities

At the commencement date of the lease, the Entity recognises lease liabilities measured at the present value of lease payments to be made over the lease term. Lease payments include: • fixed payments (including in substance fixed payments) less any lease incentives receivable; • variable lease payments that depend on an index or a rate; • amounts expected to be paid under residual value guarantees; • exercise price of a purchase options reasonably certain to be exercised by the Entity; and • payments of penalties for terminating the lease, if the lease term reflects the Entity exercising the option to terminate.

45 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

14. Leases (continued)

(a) Entity as a lessee (continued)

Recognition and measurement (under AASB 16 from 1 July 2019) (continued)

(ii) Lease liabilities (continued)

Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for the Entity’s leases, the lessee’s incremental borrowing rate is used, being the rate that the Entity would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g. changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

The Entity’s lease liabilities are included in borrowings.

(iii) Short-term leases and leases of low-value assets

The entity applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low value assets are recognised as expense on a straight-line basis over the lease term.

(iv) Leases that have significantly below-market terms and conditions principally to enable the Entity to further its objectives

The initial and subsequent measurement of right-of-use assets under leases at significantly below-market terms and conditions that are entered into principally to enable the Entity to further its objectives is same as normal right-of-use assets. They are measured at cost, subject to impairment.

Recognition and measurement (under AASB 117 until 30 June 2019)

The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset (or assets), even if that asset (or those assets) is not explicitly specified in an arrangement.

Until 30 June 2019, a lease was classified at the inception date as a finance lease or an operating lease. A lease that transferred substantially all the risks and rewards incidental to ownership to the Entity was classified as a finance lease.

Where a non-current asset was acquired by means of a finance lease, at the commencement of the lease, the asset was recognised at its fair value or, if lower, at the present value of the minimum lease payments. The corresponding liability was established at the same amount. Lease payments were apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges were recognised in finance costs in the Statement of Comprehensive Income. Finance income arising from finance leases is recognised over the lease term, based on a pattern reflecting a constant periodic rate of return on the lessor’s net investment in the lease.

46 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

14. Leases (continued)

(a) Entity as a lessee (continued)

Recognition and measurement (under AASB 117 until 30 June 2019) (continued)

Property, plant and equipment acquired under finance leases was depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Entity will obtain ownership by the end of the lease term, the asset was depreciated over the shorter of the estimated useful life of the asset and the lease term.

An operating lease is a lease other than a finance lease. Operating lease payments were recognised as an operating expense in the Statement of Comprehensive Income on a straight-line basis over the lease term.

(b) Entity as a lessor

Lessor for finance lease Future minimum rentals receivables (undiscounted) under non-cancellable finance lease as at 30 June are as follows:

2020 $'000

Within one year 810 One to two years - Two to three years - Three to four years - Four to five years - Later than five years - Total (excluding GST) 810

Reconciliation of net investment in leases 2020 $'000

Future undiscounted rentals receivable 810 Unguaranteed residual amounts - undiscounted - Less: unearned finance income (3) Net investment in finance leases 807

Leases that the Entity transfers substantially all the risks and rewards incidental to ownership of an asset are classified as finance leases. From 1 July 2019, subleases are classified by reference to the right-of-use asset arising from the head lease, rather than by reference to the underlying asset.

At the lease commencement date, the Entity recognises a receivable for assets held under a finance lease in its Statement of Financial Position at an amount equal to the net investment in the lease. The net investment in leases is classified as financial assets amortised cost and equals the lease payments receivable by a lessor and the unguaranteed residual value, plus initial direct costs, discounted using the interest rate implicit in the lease initial direct costs. The Entity records its back- to-back sub-leases as finance leases, resulting in the recognition of finance lease receivables as opposed to the right-of-use assets.

47 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

14. Leases (continued)

(b) Entity as a lessor (continued)

Lessor for operating lease Future minimum rentals receivables (undiscounted) under non-cancellable operating lease as at 30 June are as follows:

2020 2019 $'000 $'000

Within one year 340 583 One to two years 243 97 Two to three years 243 - Three to four years - - Four to five years - - Later than five years - - Total (excluding GST) 826 680

Recognition and measurement – lessor for operating leases

An operating lease is a lease other than a finance lease. Rental income arising is accounted for on a straight-line basis over the lease term and is included in revenue in the Statement of Comprehensive Income due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the underlying asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

48 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

15. Other assets

2020 2019 $'000 $'000

Non-current other assets Prepaid asset - Sydney Metro City and South West 157,658 - Non-current other assets 157,658 -

Movement in right to receive privately financed transport infrastructure Additions 53,041 429,120 Reclassifications (to)/from property, plant and equipment 104,617 (2,566,581) Net increase in assets from administrative restructure - 2,137,461 Balance at 30 June 157,658 -

The entity entered into Public Private Partnership (PPP) with Northwest Rapid Transit for the construction of the and City and South West projects. The costs incurred prior to completion of the construction phase are recognised as a prepaid asset in accordance with NSW Treasury Policy TPP 06-8 ‘Accounting for Privately Financed Projects’. Upon completion, the prepaid assets are transferred to property, plant and equipment, and form part of the cost base of the metro operational assets.

16. Fair value measurement of non-financial assets

Fair value measurement and hierarchy

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability.

A number of the Entity’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. When measuring fair value, the valuation technique used maximises the use of relevant observable inputs and minimises the use of unobservable inputs. Under AASB 13, the Entity categorises, for disclosure purposes, the valuation techniques based on the inputs used in the valuation techniques as follows: • Level 1 – quoted prices in active markets for identical assets / liabilities that the Entity can access at the measurement date; • Level 2 – inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly; and • Level 3 – inputs that are not based on observable market data (unobservable inputs).

The Entity recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

49 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

16. Fair value measurement of non-financial assets (continued)

(a) Fair value hierarchy

Fair value measurements recognised in the Statement of Financial Position are categorised into the following levels at 30 June.

Total fair 30 June 2020 Level 1 Level 2 Level 3 value $'000 $'000 $'000 $'000

Property, plant and equipment Land and buildings - 43,120 238,690 281,810 Land and buildings - 43,120 238,690 281,810 Plant and equipment - - 20,195 20,195 Rolling stock - - 645,348 645,348 Plant and equipment - - 665,543 665,543 Rail systems - - 8,311,720 8,311,720 Infrastructure systems - - 8,311,720 8,311,720 - 43,120 9,215,953 9,259,073

Restated Restated Total fair 30 June 2019 Level 1 Level 2 Level 3 value $'000 $'000 $'000 $'000

Property, plant and equipment Land and buildings - 2,050 296,406 298,456 Land and buildings - 2,050 296,406 298,456 Plant and equipment - - 27,491 27,491 Rolling stock - - 644,863 644,863 Plant and equipment - - 672,354 672,354 Rail systems - - 8,156,890 8,156,890 Infrastructure systems - - 8,156,890 8,156,890 - 2,050 9,125,650 9,127,700

Fair value of land and building has been restated to be $14.9 million million higher in 2019. Refer Note 31 for details of regarding restated prior year balance.

(b) Valuation process

The entity obtains independent valuations for its land and buildings assets at least every 3 years and for its other non- financial assets at least every 5 years.

The entity engages external qualified valuers to determine the fair value of the Entity's non-financial assets. An interim desktop revaluation of Metro Northwest rail assets (excluding land) was conducted by AECOM Australia as at 31 March 2020. An interim desktop revaluation of the Sydney Metro Northwest land assets was conducted by Jones Lang LaSalle Advisory Services as at 30 June 2020. The scope of the land valuation excluded developable land under Northwest Property Development Agreement, which remains within asset under construction as they are being developed in partnership with Landcom. Leasehold improvement within land and building category and office fitouts within plant and equipment asset category are measured using depreciated historical cost as an approximation of fair value and do not require revaluation.

50 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

16. Fair value measurement of non-financial assets (continued)

(c) Valuation techniques and input

At the end of each reporting period, the Entity updates its assessment of the fair value of each category of non-financial asset, taking into account the most recent independent valuation. The best evidence of fair value is current prices in an active market for similar assets. Where such information is not available, the fair value assessment considers information from a variety of other sources and uses specific valuation techniques including: • markets, adjusted to reflect those differences; • current replacement cost where the selling price is not available, with reference to most appropriate modern, depreciated equivalent replacement asset that provides similar economic benefits; • construction costs incurred by the Entity based on contract costs and overhead costs escalated from contract to measurement date;

• discounted cash flow projections based on estimates of future cash flows.

These valuation techniques maximise the use of observable inputs where available and rely as little as possible on entity or asset specific estimates. The level in the fair value hierarchy is determined on the basis of the lowest level input that is significant to the measurement in its entirety. If significant inputs required to measure fair value of an asset are observable, the asset is included in Level 2 of the fair value hierarchy. If one or more of the significant inputs is not based on observable market data, the asset is included in Level 3 of the fair value hierarchy. All resulting fair value estimates for non-financial assets are included in Level 3.

The main inputs used for Level 3 fair value measurements are as follows: • Land – sale evidence and market indicator for comparable properties, adjusted for the specific attributes of the property being revalued, such as size, configuration and location of the properties, restricted use for rail transport and infrastructure, as well as risk associated. • Metro Northwest rolling stock and specialised plant and equipment – replacement cost for modern equivalent assets, expected useful life and remaining life of the assets are estimated and reviewed by the external valuer. • Metro Northwest infrastructure assets – replacement cost for modern equivalent assets, unit of measure for each asset, appropriate indexation factors, expected useful life and remaining life of the assets as estimated by the external valuer. • Leasehold improvement makegood assets – restoration costs on the leased property estimated on the rate per square metre basis were discounted, adjusted for inflation and depreciated over the remaining lease period.

51 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

16. Fair value measurement of non-financial assets (continued)

(d) Reconciliation of Level 3 fair value measurement

Restated Plant and Rolling Infrastructure Land and Total equipment stock systems buildings $ '000 $ '000 $ '000 $ '000 $ '000 Fair value at 1 July 2019 281,524 27,491 644,863 8,156,890 9,110,768 Correction of prior period error 14,882 - - - 14,882 Restated fair value at 1 July 2019 296,406 27,491 644,863 8,156,890 9,125,650 Additions 3,117 - - 3,117 Revaluation increments/decrements recognised in other comprehensive (11,710) - 19,140 198,026 205,456 income Transfer (to)/from local councils (2,645) - - - (2,645) Disposals (4,983) - - - (4,983) Depreciation (60) (7,516) (18,655) (192,451) (218,682) Transfer from other classes of - 220 - - 220 property, plant and equipment Transfer from/(to) assets under (365) - - 149,255 148,890 construction Transfer (to)/from equity - - - - - Transfers to Level 2 (41,070) (41,070) Fair value as at 30 June 2020 238,690 20,195 645,348 8,311,720 9,215,953

During the year, the Entity identified additional surplus land with divestment potential, they were previously categorised as non-developable land with restricted use and valued using level 3 fair value inputs. As the sites are now considered to have an adequate depth of market appeal and would be readily saleable, their fair value have been assessed using the direct comparison method based on comparable market transactions; the fair value measurement was transferred from level 3 to level 2 of the fair value hierarchy at 30 June 2020.

Land and Plant and Rolling Infrastructure building equipment stock systems Total $ '000 $ '000 $ '000 $ '000 $ '000 Fair value at 1 July 2018 N - - - - - Additions - - - - - Revaluation increments/decrements recognised in other comprehensive income 52,884 - 45,826 560,812 659,522 Depreciation - (2,079) (3,257) (33,978) (39,314) Restated equity transfer 13,636 - - - 13,636 Restated transfer from local councils 1,246 - - - 1,246 Transfer from assets under construction 228,640 29,570 602,294 7,630,056 8,490,560 Restated Fair value as at 30 June 2019 296,406 27,491 644,863 8,156,890 9,125,650

52 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

17. Payables

2020 2019

$'000 $'000

Trade creditors 50,210 157,528 Accrued expenses 200,901 250,206 Personnel service payables 4,480 4,445 Current payables 255,591 412,179

Recognition and measurement

These amounts represent liabilities for goods and services provided to the Entity. Payables are recognised initially at fair value, usually based on the transaction cost. Subsequent measurement is at amortised cost using the effective interest method. Short-term payables with no stated interest rate are measured at the original invoice amount where the effect of discounting is immaterial.

Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above payables, are disclosed in Note 26.

18. Borrowings

2020 2019 $'000 $'000

Financial liabilities at amortised cost 797,759 77,288 Lease liabilities 12,145 - Current borrowings 809,904 77,288

Financial liabilities at amortised cost 912,410 1,756,342 Lease liabilities 19,725 - Financial liabilities at fair value 415 - Non-current borrowings 932,550 1,756,342

Repayment of borrowings 2020 2019 $'000 $'000

Not later than one year 809,904 77,288 Later than one year and not later than five years 760,263 329,129 Later than five years 172,287 1,427,213 Repayment of borrowings 1,742,454 1,833,630

The entity entered into Public Private Partnership (PPP) with Northwest Rapid Transit for the construction of the Sydney Metro Northwest and City and South West projects. Following the guidelines set out in NSW Treasury Policy Paper 06-8 ‘Accounting for Privately Financed Projects’, the carrying amount of the financial liability has been calculated based on the present value of future payments.

53 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

18. Borrowings (continued)

Recognition and measurement

Borrowings classified as financial liabilities at amortised cost are initially measured at fair value, net of directly attributable transaction costs. These are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in net result when the liabilities are derecognised as well as through the amortisation process.

Borrowings are classified as current liabilities unless the reporting entity has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above borrowings, are disclosed in Note 26.

Finance lease liabilities are determined in accordance with AASB 117 until 30 June 2019. From 1 July 2019, lease liabilities are determined in accordance with AASB 16.

Financial guarantees

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantee contracts are recognised as a liability at the time the guarantee is issued and initially recognised at fair value plus, in the case of financial guarantees not at fair value through profit or loss, directly attributable transaction costs, where material. After initial recognition, the liability is measured at the higher of the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised, less accumulated amortisation, where appropriate.

The entity has reviewed its financial guarantee and determined that there is no material liability to be recognised for financial guarantee contracts as at 30 June 2020. However, refer Note 25 regarding disclosures on contingent liabilities.

19. Provisions

2020 2019 $'000 $'000

Legal and related claims 1,768 350 Other1 32,002 - Current provisions 33,770 350

Land and buildings remediation 20,033 15,795 Non-current provisions 20,033 15,795 1 Other provision include future payment obligation under the Integrated Station Development arrangement.

54 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

19. Provisions (continued)

Movement in provisions

Land and buildings Legal and related remediation claims Other Total $'000 $'000 $'000 $'000

Carrying amount at the beginning of the financial year 15,795 350 - 16,145 Additional provision recognised 4,238 1,418 32,002 37,658

Carrying amount at the end of the financial year 20,033 1,768 32,002 53,803

Recognition and measurement

Provisions exist when the Entity has a present legal or constructive obligation as a result of a past event; it is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation.

Any provisions for restructuring are recognised only when the Entity has a detailed formal plan and it has raised a valid expectation in those affected by the restructuring by starting to implement the plan or announcing its main features to those affected.

If the effect of the time value of money is material, provisions are discounted at a rate that reflects the current market assessments of the time value of money and risk specific to the liability.

The land and buildings remediation provision is recognised when the Entity has a legal or constructive obligation to remediate property and other assets. The value recognised for each provision represents the most reliable basis for estimating the outflow of resources required to settle the obligations.

20. Other liabilities

2020 2019 $'000 $'000

Deposit received in advance 7,180 - Current other liabilities 7,180 -

Other1 2,866 625 Non-current other liabilities 2,866 625 1 Other non-current liabilities include future payments required to be made in relation to Integrated Station Development arrangement $2.2 million ($2019: $0.6 million).

55 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

21. Reconciliation of net cash flows from operating activities to net result

Restated 2020 2019 $'000 $'000

Net cash inflows/(outflows) from operating activities 2,425,386 2,555,254 Depreciation and amortisation (218,798) (39,314) Non-cash revenue and expenses (11,759) (328,386) (Decrease)/increase in receivables, inventories and other assets (79,519) 79,938 (Increase)/decrease in payables and provisions 70,688 (26,499) Net gain/(loss) on sale of property, plant and equipment (37,347) (258,277) Other gains/(losses) 62,493 3,895 Reconciliation to net result 2,211,144 1,986,611

Net non-cash revenue and expenses have been restated to be $6.2 million higher in 2019. Refer Note 31 for details regarding restated prior year balance.

22. Non-cash financing and investing activities

Restated 2020 2019 Notes $'000 $'000

Transfer from administrative restructure - others 27 - 6,327,585 Equity transfers 24 47,593 4,626,482 Resources received free of charge 3(e) 2,284 1,844 Non-cash investing activities 49,877 10,955,911 Refinancing gain of borrowing 49,620 - Non-cash financing and investing activities 99,497 10,955,911

Equity transfers have been restated to be $13.6 million higher in 2019. Refer Note 31 for details regarding restated prior year balance.

23. Commitments for expenditure

2020 2019 $'000 $'000

Capital commitments Aggregate capital expenditure for the acquisition of property, plant and equipment contracted for at reporting date and not provided for: Not later than one year 2,148,832 2,433,284 Later than one year and not later than five years 2,656,204 2,617,540 Later than five years - - Total (including GST) 4,805,036 5,050,824

Net GST on all commitments estimated at $436.8 million (2019: $459.7million) will be recouped from the Australian Taxation Office.

56 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

24. Equity and reserves

(a) Asset revaluation reserve

The asset revaluation surplus is used to record increments and decrements on the revaluation of non-current assets. This accords with the Entity’s policy on the revaluation of property, plant and equipment as outlined in Note 13.

(b) Hedge reserve

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and is accumulated in the hedge reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the ‘other gains and losses’ line item. Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognised in profit or loss, in the same line as the recognised hedged item.

(c) Accumulated funds

Accumulated funds include all current period retained funds.

(d) Equity transfers Restated 2020 2019 $'000 $'000

Epping to Chatswood assets transferred from RailCorp1 - 1,415,529 Metro Northwest assets transferred from RailCorp2 - 3,196,473 Land transferred from RMS3 - 844 Metro Northwest assets transferred to TfNSW4 (47,635) - Waterloo Metro Quarter Development transferred from Infrastructure NSW5 95,228 - Metro Northwest land transferred from Planning Ministerial Corporation6 - 13,636 Equity transfers 47,593 4,626,482

1 The Transport Secretary directed RailCorp to transfer assets related to the Epping to Chatswood line to the Entity under the Transport Administration Act 1988, and it has been accounted for as an adjustment to equity effective 26 October 2018, in accordance with TPP 09-3 ‘Contributions by owners made to wholly-owned Public Sector Entities’ (TPP09-3). 2 The Transport Secretary directed RailCorp to transfer assets related to Metro Northwest to Sydney Metro under the Transport Administration Act 1988, and it has been accounted for as an adjustment to equity effective 3 May 2019, in accordance with TPP 09-3. 3 The Transport Secretary directed RMS to transfer land surrounding Metro Northwest to Sydney Metro under the Transport Administration Act 1988, and it has been accounted for as adjustment to equity in accordance with TPP 09-3. There were two separate transfers directed by the Transport Secretary, effective 14 December 2018 and 26 June 2019. 4 The Transport Secretary directed Sydney Metro to transfer land surrounding Metro Northwest Electronic Ticketing, Wayfinding and other Digital assets to Transport for NSW under the Transport Administration Act 1988, and it has been accounted for as adjustment to equity in accordance with TPP 09-3. 5 The Premier approved a transfer of Waterloo Metro Quarter Development from Infrastructure NSW under the Growth Centres (Development Corporations) Act 1974, and it has been accounted for as adjustment to equity in accordance with TPP 09-3. 6 The Planning Ministerial Corporation transferred land surrounding Metro Northwest to Sydney Metro in accordance with a Cabinet decision, whereby land previously acquired for the Northwest rail link project and in the ownership of the Minister to be vested to Sydney Metro. This has been accounted for as adjustment to equity in accordance with TPP 09-3.

Equity transfer in 2019 has increased by $13.6 million due to the correction of prior period error. Refer Note 31 for details regarding restated prior year balances.

57 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

0. Equity and reserves (continued)

Recognition and measurement

Equity transfers represent the transfer of net assets / liabilities between agencies as a result of an administrative restructure, transfers of programs / functions and parts thereof between NSW public sector agencies and ‘equity appropriations’. These equity transfers are designated or required by Australian Accounting Standards to be treated as contributions by owners and recognised as an adjustment to ‘accumulated funds’. This treatment is consistent with TPP 09-3, AASB 1004 Contributions and Australian Interpretation 1038 Contributions by Owners made to Wholly-owned Public Sector Entities.

Transfers arising from an administrative restructure involving not-for-profit and for-profit government entities are recognised at the amount at which the assets and liabilities were recognised by the transferor immediately prior to the restructure. Subject to below, in most instances this will approximate fair value.

All other equity transfers are recognised at fair value.

25. Contingent assets and contingent liabilities

There was a dispute in relation to contractual claims and counterclaims relating to the Sydney Metro Northwest project. A non-binding decision was made by the Dispute Avoidance Board (DAB) in relation to that dispute. Both parties have a right to appeal to arbitration against the decision of the DAB. However, no appeal has been lodged. Accordingly, there is uncertainty as to the extent and amount of any potential financial outcome (either liability or amount recoverable by Sydney Metro) that will arise in relation to these disputes.

There are some other contractual claims that have been made by contractors engaged by Sydney Metro on the City & Southwest project. Sydney Metro is currently assessing its liability in relation to these claims, the amount of which (if any) cannot be measured reliably at this time.

There are a number of litigation proceedings in relation to property acquisitions for the City & Southwest project. The amount of liability (if any) that may arise in relation to these disputes cannot be measured reliably at this time.

The entity does not have any other contingent liabilities that would significantly impact on the state of affairs of the Entity or have a material effect on these financial statements.

26. Financial instruments

The Entity’s principal financial instruments are outlined below. These financial instruments are required to finance the Entity’s operations and manage forecast cash flow exposures. The entity does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

The operational activities of the Entity expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including interest rate risk, currency risk, and electricity price risk). The main risks arising from these financial instruments are outlined below together with the Entity’s objectives, policies and processes for measuring and managing risk.

Methods used to measure risk include sensitivity analysis in the case of interest rate, foreign exchange and other commodity price risks, and an ageing analysis for credit risk. Further quantitative and qualitative disclosures are included throughout these financial statements.

The Board has overall responsibility for the establishment and oversight of risk management and review, and determines policies for managing each of these risks. Risk management policies are established to identify and analyse the risks faced by the Entity, to set limits and to monitor risks. Compliance with these policies is reviewed by the Entity on a continuous basis.

58 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

26. Financial instruments (continued)

(a) Financial instrument categories

Carrying Carrying amount amount 2020 2019 Notes Category $'000 $'000

Financial assets

Class: Cash and cash equivalents 7 N/A 285,448 190,807 Receivables1 8 Amortised cost 1,204,225 877,950 Financial assets at fair value 10 Fair value through profit or loss designated - 20,833 such at initial recognition Other financial assets 11 Amortised cost 3,963 - 1,493,636 1,089,590

Financial liabilities

Class: Payables2 17 Financial liabilities measured at amortised cost 255,591 412,179 Other Liabilities 20 Financial liabilities measured at amortised cost 2,866 625 Borrowings 18 Financial liabilities measured at amortised cost 1,742,039 1,833,630 Financial liabilities at fair value 18 Fair value through profit or loss designated 415 - such at initial recognition 2,000,911 2,246,434 1 Excludes statutory receivables and prepayments (i.e. not within scope of AASB 7). 2 Excludes statutory payables and unearned revenue (i.e. not within scope of AASB 7).

During the year ended 30 June 2020, there were no defaults on any loans payable. The Entity determines the classification of its financial assets and liabilities after initial recognition and, when allowed and appropriate, re-evaluates this at each financial year end.

(b) Derecognition of financial assets and financial liabilities

A financial asset is derecognised when the contractual rights to the cash flows from the financial assets expire; or if the Entity transfers the financial assets:

• where substantially all the risks and rewards have been transferred; or • where the Entity has not transferred substantially all the risks and rewards, if it has not retained control.

Where the Entity has neither transferred nor retained substantially all the risk and rewards or transferred control, the asset is recognised to the extent of the Entity’s continuing involvement in the asset.

A financial liability is derecognised when the obligation specified in the contract is discharged or cancelled or expires.

59 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

26. Financial instruments (continued)

(c) Derivatives

The Entity only uses derivatives for hedging purposes and not as trading or speculative instruments. The Entity has Nil (2019: $20.8 million) derivative financial assets, and $0.4 million (2019: Nil) derivative financial liabilities.

Foreign exchange risk management

Forward foreign exchange contracts are used to mitigate exchange rate exposure arising from firm commitments for the purchase of goods and services in foreign currency.

All forward currency contracts have been designated as hedging instruments in cash flow hedges in accordance with AASB 9 Financial Instruments. The gain or loss from remeasuring the hedging instruments at fair value is recognised in other comprehensive income and deferred in equity in the hedging reserve, to the extent that the hedge is effective.

The following table indicates the periods in which the cash flow associated with cash flow hedges are expected to occur and the carrying amounts of the related hedging instruments. As at 30 June 2020, the Entity has no foreign exchange risk exposure.

Expected Cash flow Later than Weighted 3 months average No later and no Later exchange Contract than 3 later than than 12 rate value months 12 months months Total FLOW AUD AUD AUD AUD AUD AUD

$'000 $'000 $'000 $'000 $'000

2019 Denominated in US Dollars 0.7468 9,182 - 509 8,673 9,182 Denominated in Euros ------Denominated in Euros 0.5879 146,779 - 14,767 132,012 146,779 Denominated in Chinese Yuan 5.2359 89,643 - 8,083 81,560 89,643 Denominated in Indian Rupee 58.5364 212,303 - 15,389 196,914 212,303 Foreign exchange contracts - 457,907 - 38,748 419,159 457,907

All derivatives are measured at fair value. Information about the exposure is provided: credit risk in Note 0, foreign exchange risk in Note 26(f), the methods and assumptions used in determining fair values of derivatives in Note 26(g).

Energy price risk management

The Entity is exposed to energy price risk associated with the purchase of energy to operate transport services.

It is the Entity’s policy to manage the energy price exposure arising from its energy load by entering into fixed price supply arrangements with retailers or to hedge forecast exposures on a portion of its energy load for periods up to 15 years.

The exposure to fluctuations in the wholesale market prices is managed through the use of a derivative financial instrument.

60 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

26. Financial instruments (continued)

(c) Derivatives (continued)

Energy price risk management (continued)

The following table indicates the periods in which the cash flow associated with cash flow hedges are expected to occur and the carrying amounts of the related hedging instruments.

Expected cash flow Notional Less than 12 Greater than MW/h months 1 - 5 Years 5 Years Total $'000 $'000 $'000 $'000 2020 Energy derivative contract 134,000 (3,332) (3,749) 6,666 (415) 2019 Energy derivative contract 134,000 (1,438) (605) 2,321 278

Credit risk

Credit risk arises where a debtor or counterparty does not complete their obligations, resulting in financial loss to the Entity.

Credit risk can arise from financial assets of the reporting entity, including cash and cash equivalents, as well as credit exposure to customers, including outstanding receivables and committed transactions and derivative financial instruments. The Entity holds bank guarantees for significant contractors. The Entity has not granted any financial guarantees.

Credit risk associated with Entity’s financial assets other than receivables, is managed through the sound selection of counterparties and establishment of minimum credit rating standards.

The Entity considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Entity may also consider a financial asset to be in default when internal or external information indicates that the entity is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Entity. Credit risk impacts on the following financial instruments which are discussed below.

Cash Cash comprises cash on hand and bank balances within the NSW Treasury banking system. Interest is earned on daily bank balances at the current Reserve Bank of Australia official cash rate.

Derivatives The Entity limits its exposure to credit risk by entering into derivative financial instruments only with approved counterparties that have an acceptable credit rating. Derivative counterparties are limited to high creditworthy organisations in the energy industry. The Entity also utilises International Swaps and Derivative Association (ISDA) agreements with derivative counterparties in order to limit exposure to credit risk through the netting of amounts receivable from and amounts payable to individual counterparties.

Receivables – trade debtors All trade debtors are recognised as amounts receivable at balance date. Collectability of trade debtors is reviewed on an ongoing basis. Procedures as established in the Treasurer’s Directions are followed to recover outstanding amounts, including letters of demand.

The Entity applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade debtors. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on historical observed loss rates. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

61 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

26. Financial instruments (continued)

0 Credit risk (continued)

Receivables – trade debtors (continued)

Trade debtors are written off when there is no reasonable expectation of recovery. The Entity is not materially exposed to concentrations of credit risk to a single trade debtor or group of debtors. Most of trade debtors are NSW Government agencies, where the risk of credit loss is not material and there is no reasonable expectation of non-recovery of receivables. Therefore, Entity’s loss allowance for trade debtor as at 30 June 2020 and 30 June 2019 was determined as Nil. The Entity is not materially exposed to concentrations of credit risk to a single trade debtor or group of debtors.

(e) Liquidity risk

Liquidity risk is the risk that the Entity will be unable to meet its payment obligations when they fall due. The Entity continuously manages risk through monitoring future cash flows and maturities planning to ensure adequate holding of high quality liquid assets. The objective is to maintain a balance between continuity of funding and flexibility through the use of loans and other advances.

During the current year, there were no defaults of loans payable and no assets have been pledged as collateral. The Entity’s exposure to liquidity risk is deemed insignificant based on current assessment of risk.

The liabilities are recognised for amounts due to be paid in the future for goods or services received, whether or not invoiced. Amounts owing to suppliers (which are unsecured) are settled in accordance with the policy set out in NSW TC 11/12. For small business suppliers, where terms are not specified, payment is made not later than 30 days from date of receipt of a correctly rendered invoice. For other suppliers, if trade terms are not specified, payment is made no later than the end of the month following the month in which an invoice or a statement is received. For small business suppliers, where payment is not made within the specified time period, simple interest must be paid automatically unless an existing contract specifies otherwise.

62 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

26. Financial instruments (continued)

(e) Liquidity risk (continued)

The table below summarises the maturity profile of the Entity’s financial liabilities, together with the interest rate exposure.

------63

Maturity analysis and interest rate exposure of$ '000 financial liabilities Interest rate exposure Maturity dates 172,287 172,287 > > 5 years

Weighted 1,427,213 1,427,213

average Fixed Variable Non-

- - - effective Int.- - - Nominal interest interest interest

rate (%) 625 amount rate rate bearing < 1 year 1 - 5 years > 5 years 2,866 $ '000 19,725 5 years 740,123 762,714 329,129 329,754 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000 - 1 2020 Maturity dates Maturity

Payables - - Trade creditors - 50,210 - - 50,210 50,210 - -

4,480 4,445 $ '000 50,210 12,145 77,288 200,901 797,759 157,528 250,206 489,467 Accrued expenses < 1 year - 200,901 - - 200,901 200,901 - -

Sydney Metro 1,065,495 Personnel services payable - 4,480 - - 4,480 4,480 - -

- - - Notes to the financial statements Other liabilities - - 2,866 - - 2,866 - 2,866 - 625 Non 4,480 2,866 4,445 for the year ended 30 June 2020 Borrowings $ '000 50,210

bearing interest Financial liability 200,901 258,457 7.11157,528 250,206 1,710,169412,804 1,710,169 - - 797,759 740,123 172,287 Lease liabilities 1.42 31,870 - 31,870 - 12,145 19,725 -

26. Financial instruments (continued)

------2,000,496 1,710,169 31,870 258,457 1,065,495 762,714 172,287 rate $ '000 (e) Liquidity risk (continued) 2019 31,870 31,870 interest

Variable Payables

Trade creditors - 157,528 - - 157,528 157,528 - -

The table below summarises the maturity profile of the Entity’s financial liabilities, together with the interest rate exposure.------

Accrued expenses Interest rate exposure - 250,206 - - 250,206 250,206 - - rate Fixed Personnel services payable $ '000 - 4,445 - - 4,445 4,445 - - Maturity analysis and interest rate exposure of financial liabilities interest Interest rate exposure Maturity dates

Other liabilities 1,710,169 1,710,169 - 6251,833,630 1,833,630 - - 625 - 625 - Weighted

Borrowingsaverage Fixed Variable Non-

Financialeffective liability Int. Nominal interest interest interest 7.26 1,833,630625 1,833,630 - - 77,288 329,129 1,427,213 4,480 2,866 4,445 $ '000 rate (%) amount rate 50,210 rate bearing31,870 < 1 year 1 - 5 years > 5 years amount 200,901 157,528 - 250,206 2,246,434 1,833,630 - 412,804 489,467 329,754 1,427,213 Nominal 1,710,169 2,000,496 1,833,630 2,246,434

$ '000 $ '000 $ '000 $ '000 $ '000 $ '000 $ '000

2020 ------42 11

Payables 7. 1. 7.26 Trade creditors - 50,210 - - 50,210 50,210 - - rate (%) rate

average Accrued expenses - 200,901 Weighted - - 200,901 200,901 - -

effective Int. Int. effective Personnel services payable - 4,480 - - 4,480 4,480 - -

Other liabilities - 2,866 - - 2,866 - 2,866 - 63 Borrowings Financial liability 7.11 1,710,169financial liabilities, together with the interest rate exposure. 1,710,169 - - 797,759 740,123 172,287 ’s

Lease liabilities 1.42 31,870 - 31,870 - 12,145 19,725 - - 2,000,496 1,710,169 31,870 258,457 1,065,495 762,714 172,287

2019 Entity the Payables Trade creditors - 157,528 - - 157,528 157,528 - -

Accrued expenses - 250,206 - - 250,206 250,206 - - Personnel services payable - 4,445 - - 4,445 4,445 - -

Other liabilities - 625 - - 625 - 625 - 2020

Borrowings inue d)

Financial liability 7.26 1,833,630 1,833,630 - - 77,288 329,129 1,427,213

30 June - 2,246,434 1,833,630 - 412,804 489,467 329,754 1,427,213 expenses liabilities

Payables Trade creditors Accrued Personnel services payable liabilities Other Borrowings liability Financial Lease Payables Trade creditors Accrued expenses Personnel services payable liabilities Other Borrowings liability Financial

Liquidity risk (cont risk Liquidity

Maturity analysis and interest rate exposure of financial liabilities financial of exposure rate interest and analysis Maturity 2020 2019

Sydney Metro Sydney for the year ended 26 . Financial instruments (continued) (e) The table below summarises the maturity profile of Notes to the financial statements Notes to the financial

63 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

26. Financial instruments (continued)

(f) Market risk

Market risk relates to fluctuations in the fair value of future cash flows of financial instruments because of changes in market prices. The Entity’s exposure to market risk is primarily through foreign exchange risks associated with overseas purchase commitments and commodity price risk associate with energy purchases.

The effect on net result and equity due to a reasonable possible change in risk variable is outlined in the information provided below, for interest rate risk and other price risk including currency movements. A reasonable possible change in risk variable has been determined after taking into account the economic environment in which the Entity operates and the time frame for the assessment (i.e. until the end of the next annual reporting period). The sensitivity analysis is based on risk exposures in existence at the balance date. The analysis assumes that all other variables remain constant.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Exposure to interest rate risk arises primarily through the Entity’s interest bearing liabilities. The Entity does not account for any fixed rate financial instruments at fair value through profit or loss or as available-for-sale. Therefore, for these financial instruments, a change in interest rates would not affect profit or loss or equity. A reasonably possible change of +/- 1% is used, consistent with current trends in interest rates (based on official RBA interest rate volatility over the last five years). The basis will be reviewed annually and amended where there is a structural change in the level of interest rate volatility.

The Entity's exposure to interest rate risk is set out in the table below:

-1% +1% Carrying amount Net result Equity Net result Equity 2020 2020 2020 2020 2020 $'000 $'000 $'000 $'000 $'000

Financial assets Cash and cash equivalents 285,448 (2,854) (2,854) 2,854 2,854

-1% +1% Carrying amount Net result Equity Net result Equity 2019 2019 2019 2019 2019 $'000 $'000 $'000 $'000 $'000

Financial assets Cash and cash equivalents 190,807 (1,908) (1,908) 1,908 1,908

64 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

26. Financial instruments (continued)

(f) Market risk (continued)

Foreign exchange risk

Exposure to foreign exchange risk arises primarily through the contractual commercial transactions denominated in a foreign currency. The risk is measured using sensitivity analysis and cash flow forecasting.

The Entity manages its foreign exchange risk by entering into forward exchange contracts in accordance with its risk management policies.

Foreign exchange risk related to the principal amount of overseas purchase commitments made, that are primarily denominated in Euros, Chinese Yuan, Indian Rupees and US dollars, have been fully hedged using forward contracts that mature on the same dates as the forecast purchase are due for payment. These contracts are designated as cash flow hedges.

The Entity determines the existence of an economic relationship between the hedging instrument and hedged item based on the currency, amount and timing of their respective cash flows. The Entity assesses whether the derivative designated in the hedging relationship is expected to be and has been effective in offsetting changes in cash flows of the hedged item using the hypothetical derivative method.

In these hedge relationships, the primary source of expected ineffectiveness to be recognised in the income statement are the changes caused by variations between the forecast versus final currency cash flows where the individual amount is less than the designated hedge account, and or time of cash flows as a result of the negotiations.

The Entity’s exposure to foreign exchange risk is set out in the table below, with all other variables being held constant. All underlying exposure and related hedges are taken into account. The impact on other comprehensive income is due to changes in the fair value of the financial instruments. The impact on equity is due to changes in the fair value of forward exchange contracts designated as cash flow hedge.

A sensitivity of 10% movement in the exchange rates has been selected for use in the sensitivity analysis at the reporting date, as this is considered reasonable, based on the current Australian dollar level and the historical volatility of the Australian dollar against other currencies. Based on the value of the Australian dollar at the reporting date as compared with the currencies below, adverse or favourable movements in the foreign exchange rates would result in an increase or decrease in the Australian dollar fair value respectively.

+10% -10% Contract value Net result Equity Net result Equity $ '000 $ '000 $ '000 $ '000 $ '000

2019 Denominated in US Dollars 9,182 (43) (812) 52 992 Denominated in Euros 146,779 (647) (12,290) 791 15,021 Denominated in Chinese Yuan 89,643 (417) (7,925) 510 9,687 Denominated in Indian Rupee 212,303 (1,013) (19,245) 1,238 23,522 Foreign exchange contracts 457,907 (2,120) (40,272) 2,591 49,222

These forward exchange contracts were entered into in FY2018-19 and closed during FY2019-20, therefore there is no foreign exchange exposure for the Entity as at 30 June 2020.

65 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

26. Financial instruments (continued)

Commodity price risk

The Entity is exposed to commodity price risk from electricity purchases.

The Entity is exposed to electricity price risk associated with the purchase of electricity to operate to operate Metro services. The exposure to fluctuations in wholesale market prices is managed by entering into fixed price supply arrangements with retailers or to hedge forecast exposure on a portion of the consolidated entity’s energy load. Generally, electricity swap contracts are designated as cash flow hedges. However as at 30 June 2020, the only electricity derivative financial instrument was not designated in a hedge relationship under AASB 9. This derivative is categorised as held for trading and classified in the Statement of Financial Position as a cash flow hedge.

The Entity’s exposure to commodity price risk is set out in the table below, with all other variables being held constant.

All underlying exposure and related hedges are taken into account. The impact on other comprehensive income is due to changes in the fair value of the financial instruments. The impact on equity is due to changes in the fair value of commodity swap contracts designated as cash flow hedge.

A sensitivity of 10% movement in the spot price of the respective commodities has been selected for use in the sensitivity analysis at the reporting date.

10% -10% Notional MW/h Net result Equity Net result Equity $ ‘000 $ ‘000 $ ‘000 $ ‘000

2020 Energy derivatives 134,000 7,242 - (8,072) - 2019 Energy derivatives 134,000 9,089 - (6,249) -

(g) Fair value compared to carrying amount

Financial instruments are generally recognised at cost, with the exception of derivatives, which are measured at fair value.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability.

The fair values of financial instrument assets and liabilities are determined as follow: • the fair value of financial instrument assets and liabilities with standard terms and conditions and traded in active liquid markets are determined with reference to quoted market prices; and • the fair value of other financial instrument assets and liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis.

The amortised cost of all other financial instruments recognised in the Statement of financial position approximates the fair value, because of the short-term nature of many of the financial instruments.

66 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

26. Financial instruments (continued)

(h) Fair value recognised in the Statement of financial position

Level 1 Level 2 Level 3 Total 2020 2020 2020 $’000 $’000 $’000

Financial assets at fair value Derivative financial instruments ------Financial liabilities at fair value Derivative financial instruments - - (415) (415) - - (415) (415) Blank Line

Level 1 Level 2 Level 3 Total 2019 2019 2019 $’000 $’000 $’000

Financial assets at fair value Derivative financial instruments - 19,413 1,420 20,833 - 19,413 1,420 20,833 Financial liabilities at fair value Derivative financial instruments ------

The Entity uses the following hierarchy for disclosing the fair value of financial instruments by valuation technique: • Level 1 – Derived from quoted prices in active markets for identical assets / liabilities. • Level 2 – Derived from inputs other than quoted prices that are observable directly or indirectly. • Level 3 – Derived from valuation techniques that include inputs for the asset / liability not based on observable market data (unobservable inputs)

The Entity has assessed the fair value of its foreign exchange derivatives using quoted forward exchange rate at the reporting date that are observed directly or indirectly (Level 2).

The fair value of the energy derivative is determined as the present value of future contracted cash flows and credit adjustments (Level 3). Cash flows are discounted using standard valuation techniques at applicable market yield having regard to timing of cash flows.

There were no transfers between Level 1, 2 or 3 during the year.

67 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

27. Administrative restructure

Net assets and liabilities transferred to the Entity were as follows:

2020 2019 $'000 $'000

ASSETS Current assets Receivables - 216,271 Total current assets - 216,271

Receivables - 92,466 Property plant & equipment Land and buildings - 7,000 Infrastructure systems - 4,348,632 Other assets - 2,137,461 Total non-current assets - 6,585,559 Total assets - 6,801,830

LIABILITIES Current liabilities Payables - 398,046 Total current liabilities - 398,046

Borrowings - 1,505 Other liabilities - 74,694 Total non-current liabilities - 76,199 Total liabilities - 474,245

Net assets - 6,327,585

Following the Proclamation under the Transport Administration Amendment (Sydney Metro) Bill 2018, Sydney Metro was established on 1 July 2018. The assets, rights and liabilities of the Metro projects were transferred from Transport for NSW under an order issued by the Minister for Transport and Infrastructure effective on and from 1 July 2018. The Metro projects transferred under this vesting order refer to all parts of the Metro planned, under construction and/or constructed in Sydney, including Sydney Metro Northwest, Sydney Metro City and Southwest and Sydney Metro West.

68 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

28. Budget review The budgeted amounts are drawn from the original budgeted financial statements presented to Parliament in respect of the reporting period. Subsequent amendments to the original budget (e.g. adjustment for transfers of functions between entities as a result of Administrative Arrangement Orders) are not reflected in the budgeted amounts. Major variances between the original budgeted amounts and the actual amounts disclosed on the primary financial statements are explained below.

(a) Net Result The actual net surplus result was higher than budgeted by $809 million, mainly due to the following:

$M Net result per the Budget 1,1111111,402 Variance between budget and actual comprises Higher granting funding from TfNSW 953 Higher than budgeted depreciation expense (57) Higher than budgeted loss on asset disposal (58) Refinancing gain not included in the original budget 59 Receipt of funding for Waterloo metro development not included in budgeted revenue (69) Non-cash grant expense not included in the original budget (12) Impairment loss not included in the original budget (6) Other variances (1) Actual net result 2,211

(b) Assets and liabilities The actual net assets were $1,073 million higher than the original budget, mainly due to the following:

$M Closing net assets as per the Budget 14,988 Variance between budget and actual comprises Receivables from integrated station developments not included in the original budget 1,128 Provisions not included in the original budget (54) Transfer of assets from other Government agencies during the year 48 Higher than budgeted depreciation on property, plant and equipment (57) Income received in advance not included in the original budget 7 Other variances 1 Actual net assets 16,061

(c) Cash flows The closing cash position was $211 million higher than budget due to:

$M Closing cash and cash equivalents per budget 74 Variance between budget and actual comprises Higher than budgeted net cash flow from operating activities mainly due to higher grant funding 882 Higher than budgeted net cash flow from investing activities due to higher capital spend (785) Higher than budgeted net cash flow from financing activities 8 Higher than budgeted opening cash balance 106 Closing Actual cash and cash equivalents 285

69 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

29. Related party disclosures

a) Key management personnel compensation

During the year, the Entity incurred $1.1 million (2019: $1.1 million) in respect of the key management personnel services that are provided by the Transport Service of NSW. The amount incurred excludes long service leave and defined benefit superannuation scheme benefits assumed by the Crown Entity in accordance with NSWTC 16-12 Related party disclosures.

b) Transactions and outstanding balances with key management personnel of the Entity and its parent during the financial year

There were no material transactions or outstanding balances with key management personnel of the Entity and its parent during the financial year.

c) Transactions and outstanding balances with other related parties during the financial year

There were no transactions or outstanding balances with other related parties during the financial year.

d) Transactions with government related entities during the financial year

During FY2019-20, the Entity entered into the following transactions with other entities consolidated as part of the NSW Total State Sector (the ultimate parent) within the normal course of business:

• Grant revenue received from Transport for NSW; • Monthly reimbursements from RailCorp for the design and construction of major rail projects by Sydney Metro; • Recoupment of project and other costs incurred by Transport for NSW on behalf of Sydney Metro; • Payments for personnel services provided by Transport Service of NSW; • Payments for shared services provided by Transport for NSW, these are charges for personnel services, finance, human resources, and information technology services; • Lease arrangements with Transport for NSW for the use of a community centre and an office building; • Payments for services and works provided by other agencies, including Transport for NSW and Sydney Trains • Reimbursement of replacement bus service payments to Transport for NSW; • Contribution from Infrastructure NSW in relation to Waterloo Metro Quarter Development; • Assets transferred to Transport for NSW via vesting order signed by the Transport Secretary; • Assets transferred from Infrastructure NSW directed by the Government; • Receipt of the Affordable Housing Contribution Fund from Infrastructure NSW to apply to the affordable housing component of the Waterloo Metro Quarter Development; and • Recoupment of project and other costs incurred by Sydney Metro on behalf of Landcom.

30. Trust funds

The entity holds funds in trust for compulsory land acquisition compensation payable under the Land Acquisition (Just Terms Compensation) Act 1991. As the Entity performs only a custodial role in respect of these monies, and because the monies cannot be used for the achievement of the Entity’s own objectives, these funds are not recognised in the financial statements.

The following is a summary of the transactions in the trust account:

2020 2019 $'000 $'000 Cash balance 1 July 8,070 - Add: Receipts 49 263,168 Less: Expenditure (1,556) (255,098) Cash balance at 30 June 6,563 8,070

70 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

31. Correction of prior year balances

Land transfer

It has been identified that properties were transferred or acquired by the Entity in the 2018-19 financial year for nil consideration, and were not recorded in the 30 June 2019 financial statements. These transfers should have been recorded at their fair value. As such, the Entity restated the prior year balance of property, plant and equipment by $17.5 million increase to account for these transfers that were not recorded, with the corresponding adjustments to equity ($13.7 million) and other revenue ($3.8 million).

Transfer of assets

As part of project delivery, the Entity is required to undertake works to build assets for third parties such as councils, utility providers and other Government agencies, and once completed, the assets are transferred or handed over to the third parties. These works are generally undertaken via interface agreements or work authorisation packages with the relevant third party. Whilst the costs incurred in undertaking third party works are considered to be part of the capitalised project costs during construction, they are expensed as non-cash grant expense upon handover or transfer to the respective third parties, due to the loss of control/risks associated with the assets.

Further analysis of the third party works completed by the Entity has identified additional assets that were completed and transferred to third parties during 2019, but were not expensed. As such, the Entity has derecognised the carrying value of these assets from property, plant and equipment ($10.0 million) with a corresponding prior year adjustments to grant expense.

The impact of the Statement of comprehensive income and Statement of financial position from restating the balances in the prior year due to the above matters are shown below.

Impact on Statement of Comprehensive Income

Original Adjustment Restated 2019 2019 2019 Notes $'000 $'000 $'000

Expenses excluding losses Grants and subsidies 2(g) 322,163 10,043 332,206 Total expenses excluding losses 727,488 10,043 737,531

Revenue Other revenue 3(f) - 3,820 3,820 Total revenue 2,974,704 3,820 2,978,524

Net result 1,992,834 (6,223) 1,986,611

Total comprehensive income 2,655,960 (6,223) 2,649,737

71 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

31. Correction of prior year balances (continued)

Impact on Statement of Financial Position

Original Adjustment Restated 2019 2019 Notes $'000 $'000 $'000

ASSETS Non-current assets Property plant and equipment Land and buildings 13 529,635 14,882 544,517 Infrastructure systems 13 13,459,499 (7,469) 13,452,030 Property, plant and equipment 13 14,661,488 7,413 14,668,901 Total non-current assets 15,410,553 7,413 15,417,966 Total assets 15,858,970 7,413 15,866,383

Net assets 13,596,391 7,413 13,603,804

EQUITY Accumulated funds 12,933,265 7,413 12,940,678 Total equity 13,596,391 7,413 13,603,804

Impact on Statement of Changes in Equity

Original Adjustment Restated 2019 2019 Notes $'000 $'000 $'000

Accumulated funds Net result for the year 1,992,834 (6,223) 1,986,611 Total comprehensive income for the year 1,992,834 (6,223) 1,986,611 Equity transfers 4,612,846 13,636 4,626,482 Balance at 30 June 2019 12,933,265 7,413 12,940,678

Total Equity 13,596,391 7,413 13,603,804

72 Sydney Metro Notes to the financial statements for the year ended 30 June 2020

32. After balance date events

COVID-19

The outbreak of the novel Coronavirus (COVID-19) was declared as a global pandemic by the World Health Organisation on 11 March 2020. Measures taken by various governments to contain the virus have affected economic activity.

The Entity receives funding from Transport for NSW which receives appropriations from the Consolidated Fund, and the Treasurer has authorised Ministers to spend specified amounts from Consolidated Fund from 1 July 2020 until the earlier of 31 December 2020 (or another day prescribed by the regulations) or enactment of the 2020-21 annual Appropriations Bill. Therefore, there is no risk for the Entity to continue operating as a going concern after 30 June 2020.

At this stage, the impact on the Entity’s operation and financial performance has not been significant.

The real estate market is being impacted by the uncertainty that the COVID-19 outbreak has caused. Market conditions can change within a relatively short period of time. The Entity engaged an independent external valuer to undertake a market review to identify any adverse material market movement in values since 30 June 2020. The external valuer advised that since the 30 June 2020 land valuation, there has been limited sales data to draw conclusions from and there has been too little time passed since the previous valuation for the market to have moved materially due to COVID-19. The Entity also noted that there is significant market uncertainty, whereby the fair value of land and buildings may change significantly and unexpectedly over a relatively short period of time. The Entity will continue assess the implications of COVID-19 on the fair value of its land assets when new information becomes available.

There are no other events that have occurred after the balance date that would have a significant impact on the financial statements.

End of audited financial statements.

73 Sydney Metro

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